Only You Can Prevent The Sky From Falling

Last week in The U.S. Bureau of Labor Statistics is Wrong. Dead Wrong!, I alerted you to a recent discovery of Tim Minahan’s that the U.S. Bureau of Labor Statistics latest report on the sector is that overall employment for purchasing and supply managers is expected to grow slower than the average for all occupations through the year 2014 and that demand for purchasing workers will be limited by improving software.

This is, of course, wrong. Now, Tim did note that the report states it was based on 2004 assessments, but it’s still a travesty to make future projections on stale data, especially data that does not represent the trends that are being corroborated by all of the major societies, publications, and research organizations in the sector, including the ISM, Purchasing Magazine, and Next Level Purchasing. Specifically, the demand is increasing, and new software is not limiting the demand for educated professionals – although it may be decreasing the demand for tactical purchasers – as it is significantly increasing the demand for strategic supply management professionals.

But the most interesting outcome was that even though Jason Busch and I whole-heartedly agreed with Tim, Charles Dominick had a different perspective, which he stated in Read Yesterday’s Purchasing Blogs? Don’t Panic! and The Purchasing Talent Crunch Paradox, the first of which drew commentary from Tim and the second of which drew commentary from yours truly.

In his first post, Charles states that the BLS report, which states that demand or purchasing workers will be limited by improving software, and that Tim’s post, that quotes numerous real-world examples of executives not being able to find the talent to fill their needs, are not in contradiction, because tactical purchasing jobs, which he associates with the BLS report, will decline as new procurement software is implemented and strategic purchasing jobs, which he associated with the talent crunch described in Tim’s post, will continue to increase. He’s right, but that doesn’t address the fact that the BLS report states to cover the industry as a whole, and if strategic purchasing jobs are increasing faster than tactical purchasing jobs are decreasing, than this means that the overall demand for professionals will continue to increase, as reported by the numerous surveys by the ISM, Purchasing Magazine, and others over the three years (or so) that have passed since the Bureau collected it’s statistics.

This at least partially invalidates Charles’ claim that the BLS was not incorrect in it’s statement that demand is expected to grow slower than the average. Charles correctly points out that “grow slower than average” does not mean decline, but, as Charles notes, this puts growth in the 0-8% rate, and every recent study I’ve read clearly puts growth overall above 0%!

Of course, the only way to answer this question precisely is to know the percentage of tactical jobs being lost to technology (and, as Charles points out, global outsourcing) and the number of jobs being created to tackle strategic sourcing. However, with the growing complexity of global trade (countless new regulations, security acts, regulatory acts, foreign trade zones, special economic zones, preferential trade agreements, etc, etc, etc), rising commodity prices almost across the board, corporate social responsibility, and continuing price pressure, about the only way left for a company to not only increase profits but remain profitable is through better sourcing and supply chain management. I believe this is going to cause a much larger spike in demand than the downward spike caused by the reduction of tactical purchasing jobs due to technology or outsourcing.

In Charles’ second post, he notes that even if he’s right, and the number of purchasing jobs being created is only slightly more than the number of purchasing jobs being displaced, there can still be a talent crunch. And even though we disagree on the magnitude of the talent crunch in the best case situation, this is one place we do agree. I’ve been bemoaning the talent issue for quite some time now.

Charles correctly points out that just because you’ve been in purchasing for years, that doesn’t mean that you are qualified for a higher level purchasing position. There is a big difference between the traditional purchase order processing of tactical purchasing and the modern strategic sourcing initiatives of strategic supply management. In some cases, the gap is so large that it’s not that large of an exaggeration (though it is an exaggeration) to say that, with the right rules-driven software, the first job could almost be done by a trained monkey whereas the second almost requires a candidate with a graduate degree.

To this end, Charles suggests that one of the reasons for the talent crunch is that some buyers are unwilling to invest in their own purchasing careers and are reluctant to advance their own capabilities. He bemoans the fact that he hears from professionals daily who complain that their employers will not fund training or certification. He also states that, considering the average salary, they should invest in themselves since they will likely earn that money back in a hurry. (And when you consider that professionals with a recent certification or degree are very attractive in the current market where an average qualified buyer can often get a 10% to 15% raise just by switching jobs, that’s no joke.)

Although he’s right, I think we need to lay a little more blame on the employer who states he can’t find qualified talent but will not invest in the talent he already has. When you consider Hackett’s recent findings that top-quartile talent management companies generated an average EBITDA of 16.2% vs 14.1%, a 22% improvement in net profit margin, a 49% improvement in return on assets, and a 27% improvement in return on equity, there’s no reason not to invest in your talent. So before we pass the buck to the professional, let’s make sure we pass it to the corporation that lays off a group of tactical purchasers instead of retraining them and then bemoans the fact that there isn’t a strategic supply professional to be found. After all, when you’re an executive, the buck always stops with you!

So, if you want to stop the sky from falling in the purchasing profession and escape the worst of the coming talent crunch, you, and your company, need to invest in career development now – before it’s too late. The talent crunch is coming! Almost 76M baby boomers in the US will soon be eligible for retirement – over 25% of the US population and over 35% of the US workforce, 25% of the world’s population reaches retirement age in the next 3 years, there are significant population declines underway in many first world economies, and, current studies indicate that employers estimate that 39% of their current workforce and 26% of new hires will have basic skill deficiencies. There’s just no avoiding it. But proactive planning and skills development can definitely minimize it and prevent the sky from falling.