Workforce Management

This topic might more accurately termed "talent management," but regardless like many others have noted the situation is a challenging one for both 3PLs and shippers. Demand for supply chain talent by most accounts is continuing to outstrip supply, and there are predictions that this will be exacerbated in the coming few years by a mass wave of retirements from the baby boomer generation.

One bit of good news is that the number of students in supply chain programs in the US at least are up something like 20% over the past few years, though this next generation may not be quite ready to fill the expert shoes of those retiring in time to stem the problem.

Another challenge the 3PL industry itself faces is that it seems more common for senior managers and executives to go from 3PL to shippers than the reverse. This obviously presents a challenge to 3PLs in terms of delivering world class performance, as talent leaves to their client.

What can shippers or 3PLs do about talent management? The report says companies need to manage talent both vertically and horizontally: a vertical link to strategy and a horizontal link across all talent management practices.

"The vertical link - also known as strategic alignment - is the connection between business needs and individual performance," the report says. "The horizontal link- known as integrated talent management - reflects how all the talent management practices are integrated into a coherent system and leveled at the same goals."

The report offers the graphic below that quickly summarizes what it believes are the practices that separate talent management leaders from the pack:

3PLs Use of Mobility and CRM

In summary, the report both sees and recommends that 3PLs make more use of customer relationship management (CRM) and related Cloud technologies to provide better service to clients and improve their own sales processes.

It certainly makes sense, for example, that a large 3PL managing logistics activities for a global customer across the world would want to use CRM tools to standardize process and interactions with the client across those different sites and geographies.

The report also talks about using CRM, for example, as the platform to present client KPIs, though we will note there are certainly approaches to that outside CRM tools.

The survey data showed 3PL sales reps spend only about 45% of their available time in "customer facing" activities. This is an issue in virtually every industry, not just 3PLs, but the report also suggests that the information and automation a CRM system can provide has the chance to move that engagement number much higher.

So what if such tools were able to increase the productivity of a 3PL's sales force by 20%? What should the 3PL do with these what amounts to new resources?

Interestingly, the plurality of shippers (35%) think 3PLs should trim back staff to lower their cost structures. The plurality of 3PLs think they should use the "found" resources to expand into new markets or geographies.
The report also notes the differences in 3PL sales talent. Some sales reps are good at winning new business (hunters) and others are better managing on-going relationships (farmers). This is a well-known issue in sales in many markets, technology especially, but not often discussed publicly.

The report suggests CRM can somehow help address this challenge, but SCDigest says as a shipper it is important to get a "farmer" type relationship manager once a relationship is established , not someone whose eyes are really focused on the next deal with someone else.

Mexican Logistics

Mexico, despite its challenges, is certainly a rapidly growing force.

Mexico is the 14th largest economy in the world and the second largest economy in Latin America to Brazil. American trade with Mexico has grown by nearly 30% since 2010 to $507 billion annually, and Goldman Sachs reports that Mexico is on-track to become the fifth largest global economy by 2050.

That latter point is really something if you consider it.

With still low wages and geographic proximity, Mexico of course has become a prime choice for outsourced manufacturing or "near shoring." While 58% of respondents said they have not yet started operating in Mexico, many others have, as shown in the graphic below, a trend that is almost certain to continue.

That growth comes despite the many challenges of doing business in Mexico, especially in the logistics area. Transportation infrastructure has not kept pace with growth. Crossing the US-Mexican border is a slow and frustrating exercise for most (the auto industry has been able to achieve pre-clearance) and loads have to be switched to local carriers each way after the border has been crossed.

The regulatory climate in Mexico can also be challenging, and in general the use if supply chain technology is low. In some area, crime, security and corruption remain major issues.

Despite all that, investment in Mexico continues to grow. It is expected, for example, that in not too many years Mexico will become the world's top producer of automobiles, becoming the manufacturing hub for both the US and South American market. For now, labor costs are not rising anywhere near as fast in Mexico as say in China, making it increasingly attractive.

If Mexico could just improve the process for crossing the border, such keep customs operations going 24 x 7, rather than closing between midnight and 6 a.m. and having limited Sunday operations, and allow more pre-clearances, that would make Mexico even more attractive sourcing destination. Why the country continues to resist addressing these issues remains something of a mystery.

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