3PLs, shippers seek new crop of supply chain leaders, make HR priority.
By Eric Kulisch
There are not enough highly qualified logistics specialists with management skills entering the supply chain profession, or being groomed by companies, to meet demand as global productivity and trade continue to grow, industry executives and academics say.
In addition to not adequately developing talent, shippers and third-party logistics providers (3PLs) are not always effective at recruiting and preparing employees for executive positions.
A number of outsourced logistics providers have begun to address the shortage of supply chain management talent by creating programs that quickly identify rising stars from college and circulate them through various operational sides of a business in an effort to accelerate the development of future leaders. And several forward-thinking organizations are putting more emphasis on upgrading human resources, including placing people with supply chain backgrounds in the personnel department, so they can do a better job recruiting and retaining supply chain graduates.
“What we’re observing for bigger companies that have a human resources department for hiring is they get a job specification, but they don’t really understand all that’s done in supply chain management,” Jim Rice, deputy director of the Center for Transportation and Logistics at the Massachusetts Institute of Technology, said.
Caterpillar Logistics, automotive and heavy equipment shipping specialist Wallenius Wilhelmson Logistics, and Intel are examples of companies that have placed people with backgrounds in logistics operations in their personnel departments, he said.
Last December, non-asset based logistics provider Transplace took the unusual step of hiring a chief human resources officer that reports to the head of the company and is a member of the leadership team.
“We used to view human resources as an administrative function, reporting to the CFO, making sure the benefits are right, that everyone gets their paychecks on time and their files are accurate. But what we thought we were really missing is the strategic element of human resources,” Chief Executive Officer Tom Sanderson said during a panel at the Council of Supply Chain Management Professionals’ annual conference in Atlanta, Oct. 1-3.
Elevating human resources to the executive suite has enabled the company to shift its emphasis to hiring the right people from the start, retaining talent and guiding the best managers into leadership roles, he explained.
“You can do a lot more things and it really drives a lot more employee satisfaction” because career development is not left to chance, he told American Shipper after the event.
Fast-Track To Leadership. Some companies are no longer content to wait for the next generation of leaders to percolate up from their operational ranks. Penske Logistics, Menlo Worldwide Logistics and Exel are examples of 3PLs that have made a concerted effort to speed up the development of a leadership cadre. They are motivated by a desire to put the recruits’ skills to best use, while providing the challenges and career path sought by high flyers that could limit the temptation to leave for greener pastures.
Last summer, Penske kicked off the second class of new hires in its Supply Chain Leaders Program, which provides a range of leadership training and work assignments across several divisions and geographies. Penske specifically recruits candidates for the rigorous, two-year program from supply chain management programs at schools such as Penn State University, University of Tennessee, Central Michigan, Texas A&M, and Miami University of Ohio, Jennifer Biehn, director of corporate human resources, said.
Seven students were brought onboard in the first year and 10 more trainees joined the program this year, she said.
The company has five product lines —dedicated contract carriage, warehousing, lead logistics, transportation management and supply chain consulting — and each participant goes through two separate one-year rotations in at least two product lines.
At the same time, Penske trains the fledgling supervisors about the different types of business and how to be a leader, as well as providing a heavy dose of coursework on quality control strategy and process improvement, including lean methodology, Six Sigma, executive presentation skills, and analytical thinking, Joe Gallick, senior vice president of sales, said.
During the first year, the all-star hires are required to take on a project that involves lean methods to eliminate waste and improve efficiency that benefits the location, the customer and Penske as a whole. In the second year, they are required to get certified as a Six Sigma “Green Belt” and take on a more extensive process improvement project, Biehn said.
(Six Sigma is a business management strategy that relies heavily on statistical analysis and quality control methods to eliminate problems by reducing variability in processes. “Green Belts” are employees who begin to implement Six Sigma methods along with their other job responsibilities under the tutelage of an expert.)
A component of the projects is to look for financial savings. The Supply Chain Leaders participants so far have found annual savings ranging from $10,000 to $60,000, Biehn said.
The jobs the new recruits are given are open positions, not ones just created for the program.
“These are real jobs,” Gallick said. “It exposes them to all the things we do for different customers. It’s very hard to give people a picture of what you do without seeing and participating in it.
“Typically, as we develop these young professionals, they are developing their likes and dislikes. At some point, they settle down and develop roots. So, we’re trying to help them earn supervisory and executive experience at an earlier point in their life.”
Continuing education is delivered through a range of off-site, third-party administered training modules; classes Penske has developed or acquired that are delivered by its human resources organization; and online self-paced learning tools that everyone at Penske has access to, as well as classes from professional organizations.
“So these recruits commit to relocate and engage in a two-year rotational program and those work experiences are augmented by those continuing education tools. And then, obviously, they have the first opportunities for career advancement in the organization,” Gallick said.
Menlo Worldwide, a global 3PL based in San Mateo, Calif., in July began an Emerging Leaders Program of its own designed to quickly rotate hot-shot hires through different departments, accelerate their learning of Menlo’s culture, customers and operations, and then move them to the front of the line for management positions.
The program is intended to give those on the leadership track experience in sales, finances, negotiations, communications and other skills necessary to run a business.
The company, part of the Con-Way group, has an aggressive goal of getting its star recruits to the senior manager or director level within five years, John Herb, Menlo’s vice president of human resources, said. Each assignment can take from five to 18 months, depending on how quickly the candidate learns.
“Nobody will have the same career path but hopefully they’ll have the same set of skills to be effective at that level,” he said.
Six students from Georgia Tech, Arizona State University and Michigan State University are in the first class. The schools were targeted for the program because of their rankings in supply chain education, ties with alumni who work at Menlo and their location in different parts of the country, Herb said.
The success of the program, he said, depends on the support of managers, so Menlo spent a lot of time educating those in charge of the new hires and matched the rookies with compatible mentors who serve as an informal sounding board for any issues dealing with the company.
Most companies traditionally identify emerging leadership talent over time. And circulating people around an enterprise isn’t a new concept. But both practices are often done randomly, as circumstances dictate. The difference is that 3PLs, like Penske and Menlo, are now trying to do career development in a more organized way.
Penske, for example, has a strong career development system for selecting and guiding top workers toward upper management, including the use of mentors. The Emerging Leaders Program goes a step further to bring those resources to entry-level positions. Gallick said Penske is able to do that because schools are producing more highly educated supply chain graduates.
“We see more companies come to us saying, ‘We’re going to put new hires into a six-month, one-year, two-year rotational program, or progression program.’ But it’s still not as widely used as you might expect,” Brian Gibson, a professor of supply chain management at Auburn University who authors an annual report on retail logistics trends, said during a separate discussion panel on careers at CSCMP.
Exel is the largest warehouse operator in North America and part of Deutsche Post’s massive DHL Supply Chain organization. It hires many college graduates each year who are then rotated through different operating environments for six months to a year.
The best performers in that group, plus some hired through other channels, are placed in an emerging leaders program and assigned more challenging roles, David Vieira, president of Exel Direct (Americas), said in an interview at the CSCMP conference.
Exel Direct is a service that provides retail direct delivery to homes and businesses.
The leadership program, which started five or six years ago in the company’s retail side and now applies to all industry verticals, includes some class work, he added.
“The Emerging Leaders retention rate is quite a lot higher,” Vieira said. “Most often people in that age group leave because they are not challenged enough. Pushing them ahead faster is a significant contributor for retention.”
Vieira said the key to success is having an executive sponsor for each class.
At Transplace, Sanderson said, employees are told to think about “a spiral staircase to the top rather than a rope ladder” so they can get experience with different types of operations and accounts.
Manufacturers and retailers have similar requirements for talent in their logistics departments. Halliburton, a multinational corporation that provides integrated services to the energy industry, has an intensive 2.5-year program for young college graduates to develop into mid-level managers, John Vogt, vice president of global logistics, said at CSCMP.
The new hires are moved between six different cross-functional areas and undergo extensive training on how to run a project, change management, and other tasks. Within two or three months the new hires are given a plan for managing their career. They also receive performance reviews twice a year and get a mentor who informally evaluates their progress on a more frequent basis. The program’s drop-out rate is high, Vogt said, but those that don’t make it through stay in another role because they are usually bright people that are still valuable to the company.
Vogt cautioned that shifting people around to various jobs is good for development and evaluating each person’s strengths and weaknesses, but difficult to execute because every move typically disrupts three roles in the company. Halliburton managers sit down every four months to carefully plan the rotations so they don’t detract from the company’s performance.
“We’ve got to take responsibility to make them successful,” he said, “because if they don’t take to their new job we’ve got to find them something else where they will be successful because they were successful where they came from.”
Laying out a customized career path for new hires is very important, Gibson concurred.
Companies often fail to create learning plans for individuals that spell out their expectations. Instead, they rely on general corporate orientation programs without showing management candidates how to be successful and to deal with veteran employees they will oversee.
“It really only takes a person going to one disorganized or poorly executed internal training program” to be discouraged, Gibson said. “If you’re going to do internal training make sure it’s effective or you’re going to lose people.”
Plus, “if they don’t see a solid development program and the ability to learn they are going to shy away from those organizations or stick to being analysts, not operations folks. Once hired, you’ve got to have a game plan for them” and not let young professionals drift around the organization, he said.
University Partnerships. Finding good candidates for these fast-track leadership programs involves working closely with the universities. Logistics executives say many schools are doing a better job at soliciting their input about the type of skills graduates should have and helping identify qualified students during recruiting visits.
Establishing relationships with key schools is part of the recruiting strategy at many companies, including Penske and Menlo.
Herb said Menlo is starting to get more involved with several universities, some of which have invited company officials to meetings and seminars to help shape the curriculum.
“I think they have recognized that they want to make their coursework relevant so that it prepares students for what they will see in the industry,” he said.
Many schools get feedback through industry advisory boards.
Vieira said Exel targets about 35 colleges for recruiting. The company assigns an executive, usually a former graduate, to act as the liaison with each school and develop relationships with professors who are then able to talk to students about careers at Exel, he added.
Gibson said companies should be careful to make realistic curriculum requests. A school might be able to cover transportation safety, for example, a bit more, “But we’re not going to turn them into DOT-certified specialists for hazmat.”
A common way for companies to get to know rising juniors and seniors is to offer internships.
Gibson said after his presentation that some internships last for six months and pay well. Students take time off from school to learn the business first hand and some schools give academic credit to keep them on track to graduation.
Internships benefit companies in two ways: they give both sides insight into whether they will be a permanent good fit for each other and companies get the inside track on top students to prevent them from being poached by rivals, Gibson said.
“Other companies will have to re-evaluate because when they come and ask to see the best seniors for interviews, the best are already taken,” he said.
When it’s time to recruit on college campuses, well-run companies will bring a combined team of human resources personnel and supply chain managers, as well as a recent graduate to speak to the students about what it’s like to work for the company, Gibson said.
Other companies only send to job fairs someone from human resources “who doesn’t know anything about supply chain.
“The students can’t talk to them effectively about the job. All they can tell them is a general story about the company and the HR process. And that doesn’t invoke a lot of excitement on the students’ part. That’s when we have the least success.
“They come, they set up a nice table with backdrop and they sit there and they do their text messages and e-mailing the whole time and never really engage the students. So they miss opportunities,” Gibson said.
At Halliburton, Vogt said his supply chain management team does the on-campus recruiting and final interviews and makes the final hiring decisions, with support from human resources.
Career Competition. The race for talent actually begins early in a college career when students pick their majors. The supply chain industry often loses top talent to medical, law and business schools. And 3PLs have to compete with shippers for those entering the logistics profession.
“The whole up-scaling of the industry, increasing the talent at the foundational level, is the next evolution,” Penske’s Gallick said. “And a lot of that has to do with really working hard with the universities to be attractive as a 3PL to supply chain students because their typical mindset is to work for a manufacturer. The concept of a career with a service provider is not top of mind at that age.”
Gibson said students are far more rational today about potential professions and will consider supply chain management if they are given the facts.
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“It’s not for everyone. I tell them early on, this is a 24/7, 365-day per year industry. And, yes, we work on holidays. And yes, we work on weekends. You’ve got to be fair and you’ve got to give them an honest assessment. But you also have to give them a path forward,” he said.
“The problem we run into is we have to do that every year or two because there is an entirely new group of rising juniors being recruited for other majors.”
John Pattullo, who retired Oct. 12 as CEO of CEVA Logistics, said during a separate panel with freight industry leaders that the logistics industry needs to market itself better.
“We’re in a war for talent. We want the very best people. I’m not sure we’ve put our best foot forward in terms of demonstrating what an exciting and vibrant industry this is,” he said, adding that publicizing case studies, career profiles and success stories might help create a buzz about the logistics industry.
As the logistics industry gets more sophisticated it also needs to consider raising the educational entry levels, Pattullo added.
“At the moment, if I hire a chemical engineer in the United States, Germany or Japan I’m going to get a person with roughly the same sort of educational background and capabilities. If I’m looking for a supply chain person around the world there is no such consistency.
“There’s an absence of a standard minimum threshold to work in our industry. And I think we should be looking to create supply chain engineering positions that start to become a graduate norm and get some sort of international consistency,” Pattullo recommended.
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