The Talent Crisis 2030 - Supply Chain Responses
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The document discusses the talent crisis that will impact supply chains by 2030 due to changes in demographics, population growth, and increased automation. The key points are: - Population growth and an aging workforce will reduce the available labor supply, while automation will displace many jobs but also create new skills requirements. This will result in a period of transition and potential inequality. - Reports predict that up to 35% of current jobs could be automated, while new skills will be needed. Both governments and businesses will need to address challenges around job transitions. - The supply chain industry is already facing skill shortages and will be heavily impacted. Automation is essential to overcome issues but adoption has been slow. Areas that need
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The Talent Crisis 2030 - Supply Chain Responses
- 1. Jobs Lost, Jobs Gained, Jobs Changed The Talent Crisis 2030 – Supply Chain Responses Mick Jones
- 2. 2019 was a year of turmoil for Supply Chains…
- 3. Resource Shortages – Talent Wars – Skill Shortages (take your pick) have been on our agenda’s for more than 5 years now o Driver shortages in 2018 / 19 – a glimpse of the true impact o Brexit creates another resource supply dimension for the UK o Our Industry is NOT good at speed and adoption of change o So how do we deal with a more wide-spread skill and resource impact over the next 10 years? o What can we do to reduce that impact? A period of dramatic and unprecedented change in our supply chains One more problem to add to your list!
- 4. Both reports outlined the changes in demographics in world populations, the impact of automation and AI and the implications for Governments and Business o POPULATION GROWTH – increasing the demand for products and services o DEMOGRAPHICS – workforce reduction – reducing workforce supply o AUTOMATION: Increases in Automation -> displace jobs - increase productivity (overcome reduced resource supply) o NEW SKILLS will be required - driving a TRANSITION period o Driving potential INEQUALITY -> wage inequality -> reducing demand for products o Laying down key CHALLENGES for Government and Business ‘population growth + labour force growth + labour force productivity ~ determines economic output growth’ ‘Jobs lost, jobs gained, jobs changed’ (with thanks to MGI) Government 2018 reports by Bain and MGI to understand the impact of working demographics up to 2030.
- 5. World Population continues to grow at around 1% per annum In my lifetime the population of the World will have trebled! Massive labour increases have helped to drive an economic revolution over the last 100 years… Total Global Population Est. 7.8Bn Total Working Population Est. 2.8Bn
- 6. ..but the era of abundant labor has ended! Say goodbye to the Baby Boomer Generation Baby Boomers start to leave the working population – reducing SUPPLY Living longer + retirement age up – increasing SUPPLY & DEMAND Younger people enter the workforce later – reducing SUPPLY Labour Stagnation slows global economies + add cost (healthcare) Which should be good news for workers – BUT tale of two workforces Bain 2018
- 7. 0 500 1000 1500 2000 2500 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-29 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95 + UK population by age 2020 Take the UK as an Example…. …others are more extreme 0 500 1000 1500 2000 2500 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-29 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95 + UK population by age 2020 2025 0 500 1000 1500 2000 2500 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-29 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95 + UK population by age 2020 2025 2030
- 8. Source: bcg.com All European Countries will be impacted…. ..and all major Global Economies…. ….but India?
- 9. The Case for Automation Automation should help us to bridge the gap but…. Baseline Hypothesis: ‘population growth + labour force growth + labour force productivity ~ determines economic output growth’ Populations Continue to grow to create greater demand. Older Population has greater wealth driving greater demand. OECD: productivity growth declined substantially (near zero) Shift from higher productivity to service led / lower productivity sectors. Capital Investment declined since the global financial crisis of 2008 Delivery cost of robot dexterity 5.3 years in 2016 / 1.5 years in 2020. Foxconn: 55% total workforce in one factory (60k workers) replaced by robots Rising wage costs in China -> increased robot shipments by 600% in 5 years. OECD: Robot Productivity driven by dexterity is the key measure of capability: Automation Productivity needs to grow by 54% over current levels for them to be a viable alternative
- 10. PULL to Adopt NEW TECHNOLOGY to avoid shortages v PUSH to prevent MASS DISRUPTION ..between 75m and 350m workers displaced.. ..up to 33% of all work activities…. Automation will change the working population Jobs Lost & Jobs Changed 60% occupations can have 30% activities replaced o Even without automation – demand for workers and work will increase o Populations grow – driving economies: infrastructure growth, healthcare o Workers adapt & develop new skills alongside increasingly capable machines o Pace of technological change increases – rate of adaption of humans does not! 1. Automation will hit the lower end of the wage scale hardest-> income polarisation / inequality 2. Extended period of transition + a hesitance to invest in employment and training -> unemployment and wage stagnation. o Policy-makers and employers will need to embrace automation BUT quickly address worker transitions – a major challenge for us all o Economies that don’t expand don’t drive job growth (and vice versa) Drives risk of JOB shortages in advanced economies… India 9% China 16% USA 23% Germany 28% Global 15% % Working Populations with activities that could be automated
- 11. Add the explosion of e-com into the mix! VVVVVV Total Worldwide e-com Sales 2017 – 2023 Trillions, % change and % Retail Sales o 15% year on year growth over the last decade: a bonus for Supply Chain: o Out of every $100 in e- com sales – logistic is collecting $12 - $20…. o ….compare that to $3 - $5 in bricks and mortar! o So it is an area that we ALL want to be part of! o 25% of consumers willing to pay significant premiums for privilege of same- day or instant delivery -> companies are faced with new challenges to speed up processes. o Alibaba & Amazon gain competitive advantage by encouraging us to expect faultless instant delivery – next day delivery is now in the slow lane!! o Supply chain more complex, more agile, more granular, more data: Only automation can solve for this!
- 12. o POPULATION GROWTH – increasing the demand for products and services o DEMOGRAPHICS – workforce reduction – reducing workforce supply o AUTOMATION: Increases in Automation -> displace jobs - increase productivity (overcome reduced resource supply) o NEW SKILLS will be required - driving a TRANSITION period o Driving potential INEQUALITY -> wage inequality -> reducing demand for products o Laying down key CHALLENGES for Government and Business ‘population growth + labour force growth + labour force productivity ~ determines economic output growth’ ‘Jobs lost, jobs gained, jobs changed’ (with thanks to MGI)
- 13. …so Policy Makers and Business need to invest in and solve a 5 key areas Economic Growth: Robust demand growth and economic dynamism (Capital Projects, the environment, job creation, small businesses, start ups): Economies that don’t expand don’t create jobs! Upgrade Skills: Identify the NEW skills and give people those skills – either at the start of their career or a points throughout. Evolve our education Systems. New Business Partnerships. INVEST in Human Capital. Improve Labour Dynamism: Shifting occupational mix – more fluid labour markets. Greater mobility. Better Job Matching (Match.com, Glassdoor.com). ‘Gig’ economy. Redesign work and rethink incomes. Rethink Transition Support: Adapt support to help those displaced. Rethink traditional safety nets. Managing ‘displaced’ people through to new employment. Embrace AI and Automation
- 14. The Impact on Supply Chain Supply Chain in the middle of its own process of massive transformation. o We are at the forefront of change : e-com is sweeping across sector; we are already seeing skill shortages in parts of our business; our DC’s can be 1m ft2 & employ up to 3k people; Brexit adds another dimension; our industry remains unattractive & fuzzy More critical impact – still PHYSICAL GOOODS that need PHYSICAL SUPPLY CHAINS…everything is changing: orders placed at ANY time + inventory dispersed and in constant motion + real time tracking + an explosion of data and analytics + paperless + voice picking o Already struggling to find the skills that we need – implementing tech to overcome o We are fghting for the same skills as the tech giants - GenZ!! (1997 – 2010’s) o Logistics companies investing at a lower rate than shippers – creating problems and a do it yourself amongst our customers! o We are ALREADY manging humans and machines in same environment We need to solve for this problem in a much shorter timescale a- and we need to be at the forefront - Supply Chain IS a career of the future
- 15. Adapting Automation Quickly (and Safely) in Supply Chain Something is stopping us.. Automation is ESSENTIAL for Supply Chain to solve a number of our key problems BUT there is still an latency in our industry – ours is a complex issue • Unusual Competitive Dynamics of e-commerce – speed and variety • Lack of clarity on which technologies will triumph (VHS v Betamax!) • Problems obtaining new technology – automation companies grow at 20% • Uncertainties around the solutions for omni-channel distribution • Assymetry between the length of contracts and the payback terms
- 16. AAAAAAA The impact of Automation along Supply Chain Change the very structure and commercial basis of our industry …. - Digital disintermediation - Customers become competitors - Customers move first Learning from the Travel Industry: de-layering driven by technological advances: 1872 Integrators 1998 Meta Platforms 2004 Global Agencies 1987 High Street Shops 1960’s Black Box? McKinsey IFR: ‘..sales value of service robots for professional use increased by 32% to $9.2 billion in 2018.. Market will quadruple by 2020..’. “Without data, you're just another person with an opinion.” – W. Edwards Deming
- 17. Areas that we can Change People: o Skills & Education: New Curriculums and New Partnerships o Attracting Talent / Skills: Flexibility, work options, contractors, freelance’ ‘gig’ economy, WFH o Maintain Capability: Older workers / older talent, retraining. Rethink organisational design, processes o The ‘untapped’ market: Diversity o Employee Engagement: Strategies to fight for Gen Z Processes and Automation: o Automation: not just the big stuff – automate and ‘bot’ processes – drive real change + digital forwarding approaches, data & analytics o Don’t be a Digital Lemming – Sweat the easy stuff
- 18. ‘..In 2020 supply chains will have to steer through the twists and turns of a highly uncertain world…..the hand on the wheel is less likely to be human…’ Yossi Sheffi MIT
- 19. Thankyou!
Editor's Notes
- #20: Educators – adjust school and university curriculums to the new age The role of digital platforms – Monster.com, Glassdoor.com – speed process of mapping individuals to jobs and vice versa More flexible work options – Contractors, Freelancers, Self-employed, ‘gig’ economy, independants, WFH Redesign processes – cobots / automation – re-imagine how business works Partnerships for Talent Development Talent Strategies: older workers, retraining, etc Rethink organisational designs New skills: social, creative, logical reasoning, managing & developing people, unpredictable physical activities, advanced analytics, higher educational attainment Talent acquisition AND Talent Development, Diversity + Employee Engagement