December 2006
The logistics industry has been outpacing economic growth in most countries for the past decade. It not only represents 8% of the country's GDP in both Singapore and the Netherlands. For example, in Singapore the logistics industry's growth rate is 11% compared to domestic GDP growth of 6% and; and worldwide logistics growth last year was above 10% versus global GDP growth of 4%.
A strong contributor to the growth of the logistics industry is the trend of global sourcing resulted by the move by many companies to source or produce in low wage countries like China, India, and Eastern Europe. This results in logistics costs accounting for an increasing proportion of the overall cost of goods sold. For example, logistics related costs can account for up to 30% of the cost of goods sold.
Global sourcing has also resulted in the past decade to a move from national to regional distribution models. More recently there is a further trend towards global distribution models, which consist of a complex web of multiple supply chains which need to be managed in parallel across the globe. Thus besides being proficient in operational processes and meeting shortened customer lead times, logistics professionals must also possess skills to manage their supply chains across geographies and time zones. They must constantly explore new and innovative concepts to use supply chain management as an edge against the competitors. Thus turning the supply chain into a company's strategic asset.
Therefore, having the right professionals to manage a company's supply chain is critical in today's way of doing business. However, with a tightening labour market, it has become increasingly difficult to attract and retain talent. Companies must recognize that it is not enough to just hire talent, talent should be managed to ensure they grow to their full potential and maximize their contribution to the company.
In general, the war for talent is nothing new. Companies are using all kinds of tools in their search for available candidates with the required skill set, partly executed by themselves, partly outsourced to headhunters or recruitment agencies. Companies need to become more active: paying more attention to their own employees as 'passive candidates' - those employees who are not actively looking for a new job elsewhere but who may be open to 'seduction'.
Besides actively seeking the right talent, companies have to plan ahead, by comparing the workforce's skills with its future needs. The gaps need to be filled by encouraging employees to acquire the relevant skills. Studies by ASTD, Training magazine, and others have shown that, on average, the most profitable companies typically spend an average of 50% more on training than the least profitable companies in the same industry.
Giving talented employees the opportunities to develop their potential will not only lead to higher individual performance and eventually higher overall company performance, it would also lead to higher retention rates. On the other hand, it makes talented people even more marketable in the job market. To prevent them to be recruited by the competitor, it's important to for a company to establish an internal market, encouraging employees to apply for jobs throughout and across the company.
In summary, it is not only important to find talented logistics and supply chain professionals in a world where the supply chain plays an increasingly strategic role for any company's business. It is important to recognize the contribution of internal staff at all levels and develop processes geared at higher retention levels. There are many ways to retain talent. Apart from better employment conditions there are also many �softer� tools to retain staff. Employee development through training opportunities is one key way of motivating staff to. Another way is to actively encourage a policy of internal career development as a means of keeping talent on board. Training and career development often go hand in hand.
