Bill and Melinda Gates, the co-chairs of the largest charity foundation in the world, are busy visiting elementary schools. Their charter is to effect a fundamental change around the world and they are starting in the schoolroom. One of the most successful business ventures has been Microsoft, but like most major corporations it has a systemic problem now and in the future. The problem is the sustainability of enough qualified employees.
America, the richest nation in the world, consistently spends in the top five countries for education and yet consistently scores poorly compared to industrial countries in both science and math as a result of this investment.
In the past, business has been content to delegate to the educational system the responsibility to train its future workers. That confidence is no longer justified nor can the results be expected. Increasingly businesses must take on the responsibility of educating their incoming employees in order to continue to achieve the productivity advantage that educated labor has long produced.
This challenge and responsibility is most evident in supply and procurement. Twenty-five years ago no colleges or universities offered undergraduate or graduate degrees in procurement or supply chain management. The ranks of that function would be drawn from other functions, primarily finance. Today, few functions have had such a dramatic change in the complexities, responsibilities, and technological aspects as supply and procurement. For many companies, profit is increasingly dependent on supply and procurement and the ability for supply and procurement to deliver those advantages is dependent on qualified educated employees.
If the schools don't provide this valuable asset, businesses must.
Dan Murphy, the CPO at Caterpillar knows that and while formally the CPO (Chief Procurement Officer) he is also, informally, the CPO (Chief People Officer) for Supply and Procurement.
Dan views as his greatest assets the qualified managers who will lead Caterpillar into the 21st century. To insure the “sustainability” of talent, he has instituted formalized and required training programs to address gaps in performance and leverage competitive advantage. After extensive evaluation of what will be needed to succeed and gap analyses of what must be accomplished, he is transforming Caterpillar by transforming his managerial and talent assets through focused training.
This is a far cry from the traditional narrow view point of Purchasing Agent who was an administrative functionary, but rather it reflects the visible and strategic role of the CPO to sustain growth and profits.
For most of the 19th and early 20th century professional skills were learned on the job. Businesses accepted responsibility to train and educate their employees. In the later 20th century that role was transferred to educational institutions. The continued failures of modern education are forcing many businesses to re-establish the role of teacher.
It is not unrealistic to envision 21st century companies, like Caterpillar, embracing that role and achieving significant competitive value by optimizing its talent supply chains. What is Dan Murphy’s payback for this investment—it is hundreds of millions in cost savings and increased productivity.
What will you do to transform your company? Hoping that the educational system will address and correct their gaps is subjecting your future to an uncontrollable entity.
This is a critical time for all supply and procurement executives to reassess what are the skill sets needed to succeed in a global environment, objectively analyze what is the current state of those skills within the company, and finally, most importantly, establish the action plan to close the gaps and achieve competitive advantage.
Why is it so easy to recognize the need to upgrade plant and equipment to achieve competitive advantage and so difficult to apply the same logic to the talent supply chain?
Tomorrow’s winner will bridge that challenge.