immediate needs and/or support future growth.
Remedial programs to retrain, upgrade, bring into the
supply chain management (SCM) arena, build from a
foundation of military skills for civilian application, and
target trade-level vocational training and education are
woefully insufficient, uncoordinated, and hit-or-miss
bits and pieces of a mere slice of a long-term solution.
Get ready. You are not going to be able to find people
to do the job. And your chances of stumbling into a mob
of a couple of thousand seasonal workers are dwindling
rapidly. How will you deal with the backlash from being
unable to meet customer demand for a base with high
performance expectations?
b Wages: Hang on to the safety railing, and don’t look over the edge. As
certain geographies are finding already,
when the pool of capable workers is
fully employed, what used to be $8- and
$9-per-hour jobs are now going for
$10.50 to $13.
How does that affect operating margins, and how happy does that make
shareholders, CFOs, and the private
equity investors in the company? And
how tightly do you think the cost management wheel will get turned when one cost element
suddenly eclipses budgeted expectations?
It might get worse. We’ve yet to see more than
street demonstrations, but, when fast-food workers can
demand a $15-per-hour minimum in their industry
and we are surrounded by local initiatives to elevate
overall minimum wage levels, what will that do to exe-cution-level wages in SCM?
b Resurgence: Meanwhile, we face the challenge of
success. As the overall economy continues to, if not
rebound, at least get slowly and painfully better, all
manner of industries will be reaching out for talent.
They won’t, most likely, be rehiring those who were on
the business end of the ax when times were bad; they’ll
be after the bright, motivated, contemporary, new generation hotshots—the same ones we are after to join us
in the wild and wonderful world of SCM.
Can you say “signing bonus”? Will notoriously
tight-fisted logistics companies be willing to compete
with the big dogs for a choice cut of whatever prey the
pack has brought down? Opinion: They had better be,
if they want to be around for the main event when the
prelims are over.
b Materials and sourcing: Things that we have taken
for granted for decades, or longer, are joining a list of
endangered species. Think rare earths, which might have
dwindling global supplies, after which there is no more.
Or are completely controlled by nations or groups that
have no interest in our welfare.
Now, here’s a dual potential. One is that prices are
likely to rise, even explode, for reasons of either demand
or the capriciousness of those controlling supply (or
both). Another is that our R&D resources, or our next
tier suppliers, or someone’s engineers must find alternative materials with acceptable functionality, reliability,
and quality.
This is not getting any easier, is it?
b The death of the post office as we know it: Back to par-
cel shipment for a moment. One part of solving, or eas-
ing, the price/cost challenge is to include the U.S. Postal
Service (USPS) in mix-and-match solutions. While this
is a topic for discussion in greater detail
in another venue, it seems fair to say
there is no guarantee whatsoever that
the USPS will be up to the challenge.
b Global economic stagnation: There’s
not much light to brighten the day
when we look at flatlining economies
around the globe: Slowed growth in
China. Little to no growth in the EU
nations. Year after year of persistent
underemployment, even in the stron-
ger European economies. How long
will it be before these factors drag down
our ability to export and prosper? How do they affect
our physical trade volumes? Are our nuts and bolts of
logistics underdeployed because of these issues?
HAD ENOUGH?
There we have some eight possibilities to contemplate
during suddenly sleepless nights. Which are parts of
perfect storms and which make up some sort of witching hour is a pretty much fruitless discussion. What is
important is that you have thought through these and
who knows how many other possibilities, in preparing
for a somewhat murky future.
We should note that this is not an exhaustive rundown
of problems, pitfalls, and possibilities. Los Angeles/Long
Beach port congestion could be added to the list, as
could our national failure to build and maintain adequate, let alone superlative, supply chain infrastructure.
And no doubt, further challenges will have emerged by
the time this sees print.
The “Gin for Dinner” incentive seems to steadily
grow, but working through these sorts of issues is part
of what makes our profession a special challenge, and a
special reward.
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Art van Bodegraven may be reached at (614) 893-9414 or avan@columbus.
rr.com. You can read his blog at http://blogs.dcvelocity.com/the_art_of_art/.
Kenneth B. Ackerman, president of The Ackerman Company, can be reached at
(614) 488-3165 or ken@warehousing-forum.com.
