… but at long last, that struggle is finally over. Thanks To Capgemini, and their recent publication on “Supplier Relationship Management (SRM) Research 2012-2013”, we finally have a way to describe what we do in terms everyone can understand.
We are the garbage men.
It’s hard to say, but Supply Management could be a contender. Why?
Supply chains are more global, more interconnected, more complicated, and more prone to significant disruption than ever before — and the successful management thereof is more difficult than ever before. It requires a jack-of-all-trades that is also a master of one (trade called Supply Management). Only the best of the best of the best with the right education, experience, and EQ can manage these beasts of our own creation that are more fearsome, and ferocious (when a disruption occurs) than the great hydra of myth. And most of these people are in the US — which started the outsourcing craze in the 80s, learned the hard way when they skipped over the frying pan and into the fire, and then, as they learned the errors of their hasty ways, started institutionalizing knowledge and building best practices to help them cope, and, in the long term, succeed.
In order for the US to remain competitive, now that Europe is getting into the global supply chain game in a big way and taking advantage of their closer proximity to Asia, the current outsourcing destination of choice, and Africa, the future outsourcing destination of choice, the US is going to have to step up its supply chain game and produce more supply management leaders. This is going to require more thought leaders, more educators, and more institutionalization of knowledge and best practices. In other words, the US has to create the ability to not only produce supply chain leaders on demand, but produce world-class supply chain leaders.
Once the US has the ability to create the best supply chain leaders on a regular, and repeatable, basis, it doesn’t have to stop when the US’ needs for leaders are fulfilled. It can keep producing leaders because the entire world needs supply chain leaders, and if other countries can’t produce supply chain leaders of the same caliber (and, right now, many can’t), they will need (consulting) leadership and the US could produce the leaders to fill that gap. This has the potential to create millions (upon millions) of consulting jobs. There are over 100 Million businesses in the world, and over 10M of these are mid-sized businesses which, if they are not going global today, are likely to be going global tomorrow, and they will need help at all levels of the supply chain. That’s a lot of consulting that needs to come from somewhere. The US could produce those consultants and establish an industry around them.
And this is an industry the US could own. The continual improvement in automation technology essentially ensures that manufacturing will continue to move to lower cost locales and continual improvement in global telecommunications infrastructure essentially guarantees that customer service, data processing, and even programming will continue to move to lower cost locales as well. And even though Peter Drucker invented modern management consulting, Europe has caught up and the US really has no advantage here. In the knowledge-driven future, global leadership will be reserved to those disciplines where a country has the most advanced knowledge, and this is one area where the US has, and can continue to have, leadership.
So will Supply Management save the US Economy? I don’t think anyone can say for sure, but if the right focus was applied, in addition to saving companies hit hard by the economy by taking cost out of (and putting quality into) their supply chains, Supply Management has the potential to do the same for the economy as a whole. But will anyone realize this (before it’s too late)?
In Part I, we noted that the information industry (defined as processors, producers and distributors of data, informational, and cultural products) shed over 750,000 jobs between 2001 and 2011, making it the sector that accounted for the second biggest loss of jobs after manufacturing, as per this recent interactive info-graphic on America’s Incredible Shrinking Information Sector. We also pointed out a recent WSJ article on Where Job Growth Will Come Over This Decade and noted that, despite the claims put forward in the article, the sectors mentioned are rather unlikely to add the 12M+ jobs the BLS (Bureau of Labour Statistics) is predicting, and stated that even if the jobs materialized, the sectors won’t save the US economy on their own. But we didn’t explain why. So today we’re going to dive into the sectors one by one.
Health Care
The boomers are becoming older and their need for health care is increasing. The BLS is predicting that 5.5 M jobs will be added between 2010 and 2020 and given that the number of people in the US aged 65 and older is going to double in the next 30 years (as chronicled in “America’s Aging Population” from PRB) from over 40 Million to over 80 Million, the US is definitely going to need a lot more health care (and senior care) workers. While SI is not sure if the sector is going to add that many jobs in the next decade, it’s a safe bet that the healthcare industry will add that many jobs in the next two decades.
Leisure and Hospitality
The BLS is predicting that 1.3 Million jobs will be added in this sector. While SI doesn’t expect much of an increase in international travel to the US like the article does, and thus doesn’t expect any new jobs in the sector for this reason, it does expect that this job growth will occur as a result of the retiring boomer population. Most of the retiring boomers have money, realize they can’t take it with them, and don’t want to leave too much for their heirs because “they had to walk uphill both ways through waist-high snowdrifts when they were young and then had to work all day to earn a dollar when they got out of school” and believe that hard work is good for you. So they are going to spend their money and enjoy their retirement, which means people will need to wait on their tables, maintain their golf courses, sell them theatre tickets (as some of them don’t like that new fangled technology that requires you to punch buttons on your phone to buy a ticket), and show them to their seats. While these are not the most glamorous of jobs, they are jobs nonetheless.
Medium Skilled Jobs
The trades aren’t going away — plumbers, electricians, builders, chefs, etc. will always be needed, and these jobs can’t be outsourced. As the population steadily increases, and old buildings get older, there will be a slightly greater need for these jobs tomorrow than there are today. While the growth might not be high, it will be there.
Business and Financial Operations
According to the article, the BLS expects the field to add over 1.1 Million jobs like credit councillors, financial examiners, and compliance officers. With regulations getting more intensive and reporting requirements continuing to multiply like Fibonacci’s rabbits around the globe, the compliance industry is definitely going to boom and could create almost this many jobs on its own (which is good because there’s already a plethora of credit councillors out there and SI doesn’t expect too many jobs to be added in this industry).
Professional and Business Services
According to the BLS, this sector, comprising consultants and other professionals skilled in areas such as legal services, accounting, and advertising, will generate 3.8 Million jobs this decade. There will definitely be growth in this sector as companies continue to farm out more back-office functions, as financial reporting regulations get more complex, and as (global trade) laws continue to get more complicated, but SI has a hard time believing that 3.8 Million jobs will be added unless something changes. And most of the consulting jobs will just be replacing jobs that disappear from the other sectors — so, without a pressing need, most of the new jobs will just be cancelling out jobs lost in other sectors. However, it is certainly a better sector to focus on than Manufacturing, IT, or Traditional Media!
Technology and Information Services
According to the BLS, this decade will add over 750,000 jobs (and effectively replace the jobs that were shed last decade). As far as SI is concerned, this is a pipe dream. While there is a greater need for Business Intelligence, most of the work is going to be outsourced to cheaper countries. And the jobs that are created in the information-security analysis space (in the government and its contractors) are barely going to make up for the non-classified private industry jobs that are going to be shed to lower cost locales in India, China, and the EU. While there shouldn’t be any more decline overall, the rapid growth of the 90’s will not be repeated.
In other words, most of the jobs are going to be in health-care and in service sectors that support the retiring boomers (about 2/3rds by SI’s estimation). And with a steadily increasing population, in the long run (with some estimates adding another 100 Million, or more, to the US population over the next 30 years), the boomer retirement is not going to create enough jobs over the long-haul. So what’s going to save the US Economy?
Come back tomorrow for Part III and SI’s thoughts on the matter.
The US Economy is in trouble. Not only has manufacturing been declining steadily, but, as per this recent interactive info-graphic on America’s Incredible Shrinking Information Sector, the information industry (defined as processors, producers and distributors of data, informational, and cultural products) shed over 750,000 jobs between 2001 and 2011, making it the sector that accounted for the second biggest loss of jobs after manufacturing. In addition, the customer support industry shed over 74,000 jobs, traditional publishing shed over 263,000 jobs (and 21,000 more in the last two years), and telecommunications dispatched with a whopping 567,000 jobs.
In other words, the sectors that account for over 1/4 of US GDP have been shedding jobs faster than a swarm of shetland sheepdogs combined with a syndicate of sussex spaniels sporting on a sunny day in Spain. And there can be no rebound if new jobs don’t appear to replace the old ones somewhere.
But these sectors aren’t coming back. It will be decades before it will be cheaper to manufacture most products, especially dense Consumer Purchased Goods, at home. With the innovations in wireless technology, we need a lot less telco lines, and even less transmitters, to service the same number of customers at service levels well beyond what could be expected even five years ago. Programming can be done anywhere, by anyone, and there is always someone willing to do the same job cheaper in a developing country where a US dollar is worth considerably more than the local currency. Thanks to the internet and semantic technology, there is more content at a journalist’s disposal than ever before and research is almost automated. And online (which includes over the phone) customer support can be done by anyone in the world who speaks the same language. While we can expect the job declines to level off in media and telecommunications, just like they have done in the information sector, the jobs are not coming back.
So where will the jobs be? According to a recent WSJ article on Where Job Growth Will Come Over This Decade, they will come from:
And the article is partially right, but these sectors won’t add the 12M+ plus jobs that the BLS (Bureau of Labour Statistics) is predicting, and won’t save the US Economy on their own — at least not without a slight change in focus in a couple of the sectors. Why? Come back tomorrow for Part II and a discussion of the WSJ article predictions.
In Part I, we described the 4 major trends affecting Procurement today that were identified by Deloitte in its research and consulting initiatives (and which have been addressed in publications that include “Supply Chain Strategy”, “Winning With Your Supply Chain”, and “Charting the Course: Why Procurement Must Transform Itself by 2020”) that were summarized nicely by John Mavriyannakis, a Senior Manager at Deloitte Canada (and the Practice Leader in Sourcing, Procurement, and Settlement), in his recent presentation on Empowering Modern Procurement that was given as part of the Coupa One Vision Roadshow in Toronto
Specifically, John Mavriyannakis identified the following four trends:
As a result of these trends, it is clear that today’s supply managers need to:
But that’s not going to be enough for a Procurement organization to succeed in the long term in the dynamically changing global marketplace. If they wish to survive, Procurement and Supply Management organizations need to rethink mission and capabilities. Specifically, they need to:
While keeping in mind that they need to get to the 2020 Procurement and Supply Management organization in just 6 short years (which is no easy feat given that the average transformation time that is required for a Global 3000 organization to become a world class Procurement organization, according to The Hackett Group, is at least 5 years). In 2020, Procurement, according to Deloitte, is going to (need to) be:
And SI fully agrees with all but the last of these predictions. In addition, it partially agrees with the last prediction that Procurement is going to need to be talent rich to achieve the goals that are set before it, but given the lack of investment in talent to date in the average Procurement organization, SI isn’t sure that the talent is going to be where it needs to be in 2020. Even though talent has been in the top three Procurement issues for at least the last three years, it’s still in the top three budget items that are cut every year in these tough economic times, even though a small investment in talent can lead to a (very) large return in savings in a Procurement organization. (For example, one of the first companies to certify their entire department with the SPSM designation offered by Next Level Purchasing, a 1 Billion furniture manufacturer, doubled their annual savings only one year after completing the certification on the department level. That’s a double digit ROI multiple in one year! Compare that to the 2X or 3X you might get from automating manual processes.) Basically, the most successful Procurement organizations in 2020 will be talent rich, but the average Procurement organization will be struggling at the current rate of training and talent induction into our space.