HRExaminer Radio is a weekly show devoted to Recruiting and Recruiting Technology airing live on Friday’s at 11AM Pacific
HRExaminer Radio
Guest: Kevin O’Marah
Episode: 94
Air Date: May 8, 2015
Audio MP3
Kevin directs SCM World’s cutting-edge, practitioner driven supply chain content and research, leveraging the combined experience and insight of over 19,000 practitioners within SCM World’s membership. He delivers an innovative and interactive learning curriculum through a unique peer-driven approach.
Kevin holds specific responsibility for content relating to sales & operations planning, customer centricity and demand management, digital demand and omnichannel. He also co-chairs the SCM World Executive Advisory Board with Dr Hau Lee.
As a research fellow at the Stanford Graduate School of Business, Kevin helps to shape the direction of supply chain teaching for the next generation of business leaders. Prior to SCM World, he served as Group Vice President for Supply Chain at Gartner following the 2009 acquisition of AMR Research, where he was Chief Strategy Officer. In his 10-year career at AMR, he created the Supply Chain Top 25, wrote over 400 published articles and reports and led a six-year dialogue with business leaders and luminaries such as Bill Clinton, Colin Powell, Michael Eisner and T. Boone Pickens.
Kevin is based in Boston and travels to London frequently. He holds a Bachelor of Arts in Economics from Boston College, a Master of Science in Industrial Relations from Oxford University and an MBA from Stanford University.
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Transcript
Begin transcript
John Sumser: Good morning and welcome to the HR Examiner Radio Show. I’m your host, John Sumser, and we’re coming to you from beautiful rose encrusted Occidental, California. For you regular listeners, you’ll know that Occidental is where innovation gold started in the great state of California. Today, we’ve got Kevin O’Marah from the SCM World’s research department to talk about the shortage of people with supply chain management skills and what that means in general for the world. Kevin, how are you?
Kevin O’Marah: Great, John. It’s a pleasure to be here. I think this is going to be an interesting topic.
John Sumser: Yeah. Thanks. Why don’t you introduce yourself to the audience?
Kevin O’Marah: Sure. Well, my area of specialty is as you mentioned, supply chain management. We’ll talk about that more obviously and what that really means but it’s where everything comes from. Manufacturing, distribution, sourcing, it’s where your shirt comes from, where your oranges comes from, where your car and iPhone comes from. That’s my specialty. I’ve researched it for I don’t know, about 25 years now. I went to Stanford Business School and then worked in the field in a variety of industries over the years. Interestingly enough I started off in human resources and was expecting to be something in the area of HR organizational design, even did a masters degree in industrial relations. Here it is, a funny road but I’m right back where I started, trying to tackle the supply chain problem by thinking in terms of where is this people issue. It’s fun for me to be talking with you about this today.
John Sumser: Thanks. How does one become interested in supply chain management? That’s I’m sure, I’m absolutely sure that as a young boy you didn’t wonder around thinking of it. How did you get here?
Kevin O’Marah: You know, you’re quite right. In fact, when I started off, I graduated from undergrad in 1984. It’s been a while now. The term barely existed then. What drew my interest initially and I’m seeing this even in the young kids today, is if you are intrigued in any way by manufacturing, how do things get made. You know the show on television, “How it’s made.” I’ve got a daughter who’s 16 years old, loves that show. That’s the kind of person who finds himself interested in supply chain, where does this stuff all come from? You think about things like there’s an advertisement in television that I did as evocative. It’s an advertisement for orange juice where the consumers in the store grabs a bottle of orange juice and hidden behind the scenes is a grower and an orange grove just replenishing that bottle of orange juice to the hand. That’s the thinking that it gets you drawn into this in the first place, where does everything come from? What’s it all made out of? If you’re thinking those thoughts as a kid or as a teenager or in your college years, chances are you’re a supply chain person at heart, you may not realize it yet. That’s how I got drawn into it, John.
John Sumser: That’s interesting. You are sort of at the heart of supply chain management. What would you accomplish? Where are you headed with all of this?
Kevin O’Marah: A really good question actually. That’s part of what’s making it exciting for kids these days. We have a gap talent wise in this area. There’s a need for more but there is a bit of enthusiasm amongst younger people, millennials entering the field. That’s kind of where I’m headed too which is how do we take this where does it come from problem? This how does everything get made problem, and turn it sideways and look at it and think in terms of how do we see 10 billion people on the planet? How do we not blow up the earth’s capability to sustain us while continuing to deliver our iPhones and our running shoes and you name it. The long term of where I’m going I guess in my organization, SCM World, and I’ll tell you more about that as we go. It’s a community of supply chain bosses from around the world making everything, everything that we’re talking about just now. They’re all trying and I’m with them on this to build a global manufacturing system, a global economy, that’s sustainable. That’s really the long term here, is set it up so that you can actually see the 10 or 11 billion people that will be on this planet 50 years from now and keep us all healthy and house us and keep us warm even in 4 feet of snow as I have in Boston, winter here, without either destroying the climate or draining the natural resources around us. That’s what everybody’s really working on. That kind of keeps me going because it’s compelling as a goal and it’s an interesting engineering challenge actually. That’s where I’m headed, John.
John Sumser: That’s interesting. Do you … I assume that you are aware of the Maker Movement and that there’s a relationship agreement, Maker Movement and what you’re doing. Is that in your window of the [inaudible 00:06:01]?
Kevin O’Marah: Yeah, absolutely. Maker Movement in the particular certain technologies that are attached to it like additive manufacturing, microfactories, a lot of our big corporate clients, people like Samsung, Coca Cola, Caterpillar or General Electric, these kinds of people. They’re interested in what can be done out there within the Maker Movement in terms of tapping the expertise of small collections or individuals, small collections of designers, engineers, problem solvers or individuals in their garages, being able to figure out how to continue to innovate around, what kind of products there, what kind of materials you can use, how you can be more efficient, how you can be closer to the consumer, all of those kinds of things are part of a movement that not only makes sense for the individual in the Maker Movement at that local level, at the personal, but then at the corporate level. They see that as an opportunity to take advantage of a lot of brains doing a lot of work, a lot of personal motivation, and have that then feedback into the I guess sustainability and effectiveness of these big corporate networks. Yeah. We certainly are conscious of the Maker Movement.
John Sumser: We’d like to revisit that in a couple of minutes. First, tell me about the SCM World.
Kevin O’Marah: Yeah. SCM World, it’s a very young organization. We’re based in London. We’ve got about 120 or so corporate clients, almost exclusively giant companies. I’ll just rattle off a few names for you but they are the kinds of people you would imagine, Glaxo Smith Klein, Coca Cola, Dell, Google, et cetera. These kinds of folks, they contribute to a community of collective learning. The whole premise is that SCM World as an organization is a way for all the members who join to accelerate their learning about this problem of running the global supply chain more effectively. People contribute. Our basic format is contributed case studies, examples, presentations at events. We host quite a few physical events around the world in which some will get up and describe how they’ve solved an issue, how they’ve made something faster, better, cheaper, how they’ve made it more sustainable, how they’ve made it more personalized for the consumer. Amazon for instance is one of our members and lessons that their learned in trying to build out the e-commerce delivery system. Walgreens is one of our members. What do they doing with their corner drug store to try to be more effective? The sharing amongst that group is how the learning accelerates. SCM World is a very small company. We’ve been in business for about 5 years. We only got 50 employees but we host and facilitate this learning and it ends up being hundreds and hundreds of case studies and shared examples across the community. That’s how we work.
John Sumser: Got it, got it. The thing that got us connected throughout this conversation is the idea that there’s a sort of a global shortage of supply chain management talent. Tell me about the shortage and tell me about what that means.
Kevin O’Marah: Sure. The shortage problem is basically that there’s plenty of labor out there or plenty of human beings. What there isn’t is an adequate supply of reasonably well trained people working in factories and distribution centers and planning centers who understand how all the pieces fit together. We’ve been tracking this for 4 years in a big global survey of about a thousand supply chain executives around the world. For 4 years running, the question of how difficult talent acquisition is has risen. We’re at the point right now where about half of all respondents, 43% actually of all respondents, say that the problem of acquiring and developing and maintaining that slightly more sophisticated level of talent has gotten harder every year. We’re at the point right now where there’s a real gap between what the big companies I’m talking about need in terms of skills around mixing business objectives and personal objectives and even social responsibility objectives back into the how to of for instance filling a truck appropriately to do a bunch of deliveries or purchasing a whole bunch of raw material to feed into the factory to make cupcakes. You name it. Plenty of folks who know how to build a truckload. Plenty of folks who know how to staff a factory floor. Not enough who understand how those things affect each other and how the end game of a happy customer and a sustainable business model, how those pieces all fit together. The talent gap is really at this business understanding level that sits on top of all these little technical pieces of how to run the physical operations. It’s really gotten a lot worse in the last 5 years.
John Sumser: I want to dig down into the bits and pieces of that. I noticed yesterday that Steve Wozniak, the co-founder of Apple, is in his standard stump speech these days, tossing off the why I couldn’t get hired by Apple today. What he’s talking about is that in order to become a company that functions effectively at the scale that it does, Apple can’t afford to hire people who don’t have very rigid … Who don’t meet very rigid criteria. His observation is that what Apple does really well today is cross the kind of innovation that started the company which I think is interesting and accurate. The point of that big question is is often what is described as a talent shortage is actually a stiffening of requirements by people who don’t understand what they’re to hire for. We see this a lot. What are the odds that some of the problems that you’re talking about has to do with people over specifying the requirements for the people they are trying to hire and then having a problem because they’re after something they can’t get?
Kevin O’Marah: Yeah. That’s a really interesting question. I mean it surprises me a little bit because the kinds of problems that our members are running into on, finding the right people, is never a question of there being enough bodies. There is always tons of applicants. I think you’re on to something there with over specification. I’ve seen the job specs on Apple’s website for instance, did a detailed analysis on all the job specs on their website.
John Sumser: How are they doing?
Kevin O’Marah: Yeah. I mean we’re going through every single job spec in the entire operations area. There were a hundreds of them. We group them into categories and we looked at what are the requirements were and Wozniak’s got a point. They’re pretty darn specific. They want a bunch of stuff.
John Sumser: Yeah.
Kevin O’Marah: Yeah, yeah. You’re supposed to be let’s say a metallurgist and an expert in machining technologies and you have to understand the certain kind of software, specific software packages. Not just manufacturing planning software but specific manufacturing planning software. Yeah. It’s very, very specific and it’s tough to find someone who fits that whole spec. Funnily enough, the successful candidate, the successful new hire, is frequently somebody who came sideways, through a reference or more or less didn’t go through the normal screening process but had some kind of a personal fit, some kind of a relationship, then they learned their way into what was necessary. Wozniak has an interesting point there and as you raise it. It makes me think that the spec that is out there for the kind of person we want to hire into this talent problem that I described, of understanding the whole thing, understanding cross functionally. Maybe you’re better off with less specification and more of an adaptive learning program once you got him in there. It’s an interesting question and I really thought of it that way but that’s the reason we have a talent problem is that there is so much hiring that has happened historically in this area of supply chain based on specific technical functional skills and someone’s really really good at some specific thing. Then they’re typically not very well aware of how the thing they do affects the next guy in the chain and that’s the gap. You’re on to something quite interesting with that point.
John Sumser: Let me just drill it more and say isn’t it interesting that it’s possible that the problem in acquiring talent for supply chain management people has to do with specifications and the over application specifications? I’m sure I’m not a supply chain guy by the stress of imagination but I’m sure that there is at the state of the art a kind of a balancing act that you have to do between precision and specifications and the flexibility to choose between suppliers. That’s where if you are not careful being too rigid about specifications is a singularly interesting way to break the supply chain.
Kevin O’Marah: Yeah. No, it’s a very interesting premise and I think it does tie back to why we have a problem. There is an ample supply, a very well known technical certification source is out there. APICS for instance, the American Production and Inventory Control Society, which is now the Society for Operations Management. That’s one of them. They’ve got a certification that is widely respected and widely used and as a criteria for hiring is pretty reasonable, pretty common. What we find is APICS certification alone is the reason we have a gap. If that’s all you have, then you don’t really develop that empathy. You don’t develop that understanding. The biggest problem is not just that you don’t understand or you don’t care but you’re in a position to be creative about thinking of a new solution. The on-the-job learning, the situational learning that would occur with a less stringently specified hire but a more let’s say athletic hire, it’s the old hiring athletes versus hiring functional technical fits that is a great trade off. Somebody always wants to hire a great athlete and put him in there and let him learn as the game changes. That maybe part of the reason this talent challenge persist is that the game is changing so fast that however carefully you specify your requirements, you can’t specify the skill set you have to have tomorrow, next year, 5 years from now. In fact the harder you try to specify, the more you’ll be taking away the grades of freedom and pushing yourself almost backwards in time. It’s an interesting conundrum.
John Sumser: Yes it is. What are the basic skills of a great supply chain person like you’re talking about? What’s the framework? What do I have to know?
Kevin O’Marah: Generally they start off with some kind of an engineering mind set, preferably even degree. In fact the best kind of engineering is somewhere between manufacturing engineering or mechanical engineering is actually the typical undergraduate degree or masters degree you can take, or systems engineering which is actually a slightly better perfect fit. The limit however is if you only have your engineering background, then you lack typically some of the soft hard to model skills that make you good at this in the long run. Therefore, another thing that is very popular when trying to find someone to develop as a supply chain leader for the long run is good financial skills. You need to understand mechanical reality, therefore your engineering basis. You need to understand making money, therefore the financial basis. If you have those 2 ingredients, you’re in pretty good shape. There is as you can see, with both of those to classical credentials, there’s a need for numeracy. You have to be decent with calculations. The supply chain is not friendly to people who can’t do their math. You have to be able to figure things out quantitatively.
John Sumser: Right.
Kevin O’Marah: I think those are a couple of the main ingredients. I think the people who get the farthest in this profession are those who have those 2 ingredients but then also end up with … Think of it as a marketing bone in their body. People who know … This is hot, this is going to sell, and who can sympathize with and understand why someone’s excited over in the marketing department, why the sales guys think this particular product is going to sell like hot cakes. If you get that, and that’s more of a personality thing than it is direct training. If you have that mentality and can sit on top of the platform of mechanical engineering and financial sophistication, you’re going to go very far in supply chain.
John Sumser: Those are just … You wouldn’t know this from our short getting to know each other time. I am one of the first thousand certified professional logistics engineers. Logistics is what this discipline looks like in the defense department. It’s exactly what this looks like. There are pretty interesting broad spectrum curricula that could be moved from the military environment to the more commercial environment. Is that what we’re looking about?
Kevin O’Marah: Not as much as they should do. It’s interesting I had that comment once from the head supply chain executive over at Kellogg’s, a guy called Alistair Hirst. He said, “Listen. We specifically hire ex-military because of these capabilities.” You’re exactly right. Actually, the whole concept of supply chain give credit goes to the military. That’s really where this concept was birth. It comes out of the logistics but then it rolls up into the wider topic of how do you make it, how do you deliver, where does it come from. The military is actually a great place to turn and a lot of folks who leave the military career, either fully at the end of a 25 year career with retirement are ready to jump into the stuff and do well or who leave after a tour of duty let’s say. They tend to do very, very well. The one thing that is a bit of an issue, the technical skill is absolutely there. The problem solving skill is absolutely there. The one thing that’s a bit of a problem is supply chain people have got to be comfortable with ambiguity. They always want a perfect forecast. They always want a clear command. That’s not normally the way things work out. You have to deal with changes. Military folks have technical skill but they tend to prefer a clear chain of command, a clear mandate, a clear objective, and often times that doesn’t really translate into business as well as it should be, but there are some like Kellogg’s I said who specifically hire out of the military for that exact reason.
John Sumser: I will tell then we’ll bounce back to that question. I will tell you that in the civilian ranks in the Defense Department, the shorts of people who are massively capable of navigating and managing ambiguity, that’s what you do inside of those huge bureaucracies. That’s exactly the work that they do. The job titles and frameworks which you get to know these people, make it hard to imagine that being the dynamic folks that you’re describing, they are. They are, but they’re sort of in shabby sheet rather than the latest fashion.
Kevin O’Marah: Well, I’m sure you’re right, especially when you get into civilian rules and you’ve got to deal with politics and uncertainty and personalities, that is going to be a very transferable skill. Politics and personalities are huge in supply chain because you’re dealing with a customer who maybe fickle or a supplier who doesn’t necessarily trust you or your own colleagues, the departments within the company who have objectives that may class with what you’re trying to do. Being able to work that stuff, knowing how to work people, is vital to being successful. I take your point.
John Sumser: The next question is you can imagine this as a supply chain shortage in the specific discipline or you can imagine this as a sort of here’s another thing that everybody needs to know about a little bit so that the entire system gets easier to navigate. Do you see solutions on both sides of that? Growing and understanding how to identify the right talent in the body of people who are capable versus creating some sort of general set of principles that everybody needs to know because supply chain is how everything gets made.
Kevin O’Marah: Well, I think that there are some general principles and I do think that rather than hunting for the perfect person, you’re better off thinking what those general principles are in hunting for great people of course. Having them walk into a situation in which the principles are understood, written down, perhaps part of a training program, the principles that are universal in solving this talent problem probably extend to other industries, other functions, other career tracks. Those principles have all to do with being innovative, being agile. The phrase agile, agility, comes up constantly in this area and the reason is the game is changing. Use your example, go back to Wozniak and Apple. Everybody knows Apple, this wonderful, successful company, an innovative, great provider of killer products that people love. Of course nothing is stable for very long. Things change. They change their products. They change their platforms. They change their rules by which you use them. The general principle of make things as inexpensive as possible which is an ancient business principle, you’re always trying to drive down cost, that’s not really all there is to it and Apple demonstrates that. They make things to a certain cost but they also assure that they build enough demand that people pay will for it. People wait in line for those products and they’re not exactly cheap.
I think the general principle is being comfortable with change, being agile when you respond to change, and not necessarily just attaching yourself to a particular operational goal but instead being prepared to think in terms of the goal post has shifted, what do I do now? That’s a general principle that certainly fits for the supply chain problem. I’ll bet you it fits to many different types of career paths these days.
John Sumser: That’s great. We have flowed through a lot of time. Is there anything that you want to be sure that these audience gets about what you’re doing?
Kevin O’Marah: Yeah, I do. I think there’s one point that’s really important which is that the companies that I’m talking about that we deal with it as SCM World, they can help each other. I think that that’s a principle that should apply in this topic of supply chain, probably applies more widely. There’s a lot of power in learning as a community. You can go off and set up a training program. You can do a comprehensive talent development exercise. If you do it in isolation, you’d be drinking your own Kool-Aid. One of the reasons we’ve grown quickly at SCM World and have had a lot of success is people like to learn from each other and organizations, big companies are amazingly willing to share the lessons they’ve learned with other companies, provided it’s not an arch rival. Coke doesn’t want to tell Pepsi what to do but they’re perfectly comfortable telling Samsung what to do for instance. I think that that’s a parting thought I’d leave with you is recognize that community-based learning or wider network learning is faster and a lot more well received than you might imagine. I think that’s can speed things along for people.
John Sumser: Let me tell you a quick story about one approach to solving the problem that way. A good friend of mine is the CIO for Texas’s largest nursing home company which has a thousand large scale nursing homes under operation. He runs … Because it’s a radically decentralized organization. He runs a complicated IT shop that services all of those entities. He’s in Texas. Anybody who is great as IT talent is either in New York city or California. They left Texas unless they’re in Austin, they left Texas a long time ago. You only can get a certain kind of and quality of talent. What he does is if you are hired to work for him, the first thing he has you do is have a hundred new contacts of people at your level or higher in your technology … Because what he knows is he’s got B talent but he has to make them perform like A talent. The way you do that is by encouraging each individual in the squad to broaden their network and build and work inside of their network as a part of their job. He gets remarkable things accomplished within an environment where talent is short in an exact way that you’re prescribing. It’s an interesting marvel.
Kevin O’Marah: It’s a great boost point. That’s exactly what I’m talking about. That’s the reason these companies participate in our thing is the same principle as your friend the CIO down there in Texas is. I told you Kellogg’s. Battle Creek, Michigan. It’s a problem getting your hands on external perspective from Battle Creek, Michigan. It’s not any easier in Peoria, Illinois, where Caterpillar is headquartered but just like you friend, just like your CIO buddy in Texas, boy, there’s a lot of people happy to share some information with you provided that they feel comfortable as a network. That’s what this community is. It’s a group of people who are willing to share, to support the talent development goals they have. You’re right. That example is perfect and it is very effective. That’s exactly the way it operates.
John Sumser: That’s great. If you would, reintroduce yourself and tell people how to get hold of you.
Kevin O’Marah: Okay. My name is Kevin O’Marah. I’m responsible for all content which means everything we provide as this talent development system in this network, this community, scmworld@scmworld.com. That’s the location of the website. Based in London. I can be reached at kevin.omarah@scmworld.com. Happy to hear from anybody who’s interested in learning. We’re spending a lot of time these days with the human resources, organizational design, organizational development community because this talent development partner of choice role that we have built with the supply chain community depends pretty heavily on those specialists who really understand people, people skills, people development, people organization. Those folks are all part of our community. I’d love to hear from anybody who is interested in seeing how this community might work for you or for your organization. Again, thank you, John, for the time and really enjoyed the conversation.
John Sumser: Thanks very much, Kevin. I really appreciate you dropping by today. Thanks, everybody, for tuning in. The sun is out here at Occidental. I hope you have an amazing weekend. Take it easy.
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