How Maslow's Hierarchy Effects the Supply Chain

This week I attended the Council of Supply Chain Management's annual conference in San Diego. It's the first event I have been to in a long time that actually was close to being a sell out - several sessions were standing room only and the hallways were jammed with traffic, both encouraging signs for industry.

I'll share more on the conference in future posts, but this week I would like to focus on a conversation I had during lunch. On Monday, I met with a gentleman from Ireland who is responsible for helping Irish multi-nationals find regions in the world to establish new facilities for manufacturing, logistics, call centers and fulfillment. While eating some really amazing mashed potatoes, sorry Grandma, he explained how the Irish government views the sensitive topic of offshoring labor to low cost jurisdictions. Basically, they look at Maslow's Hierarchy of Needs, which as you probably know looks at the basic needs a human being requires for survival, and then they compare that to a region of the world to measure them as a potential location site. Let's look at Vietnam for example. They consider the needs of the average Vietnamese worker to be on the bottom end of the pyramid as they are mostly concerned with physiological and safety needs, such as food, drink and housing. Since these needs are so necessary for survival, the Vietnamese workforce is willing to work for lower wages then say a wealthy country like England or France that has a workforce higher up on the pyramid that is looking for belonging and esteem, which can come with a high paying job.

As these factors are considered when looking for places to offshore, organizations, such as this branch of the Irish government, need to predict when the region is going to shift from one level of the hierarchy to the next. If they predict right, their clients can benefit in the region for the long term. If they predict wrong and move into a region that is just getting ready to jump to the next level, it could be a wash.

As you could forecast, eventually this will all come full circle and all regions of the world will reach esteem and actualization at some point. I remeber when I turned 14 and was making $120 a week. I thought that this is all I would need to survive for the rest of my life. But as I spent my hard earned money, I wanted more to reach that level of actualization. The same will happen to Vietnam, China and India. I guess the advantage will flow to the corporations that can postpone the inevitable as long as possible.

Supplier Diversity Video from 1991

This blog has touted supplier diversity before, but an IBM minority supplier by the name of Ray Machine Inc., recently shared with me an old marketing video from 1991. The video was developed by IBM Procurement and it highlights three diverse IBM suppliers and the value and innovation they offered to IBM then, which they continue to bring to IBM 14 years later.

IBM established its supplier diversity program in 1968, but two things particularly struck me about this video. First, it was developed in 1991, at a time when IBM was at its lowest and the company was struggling financially. The fact that with all of the problems we faced that we still took the time to cheerlead the value of supplier diversity says a lot. Secondly, the consistency in what IBM's Terry Lautenbach says about it not being "philanthropy, but good business sense" and it is about finding "innovative ways of doing business" resonates today just as it did then.

Click here to view a 1 minute version of the video , it's originally 16 minutes. It was imported from a VHS tape, so the quality and sound suffered. If you hold down the "shift" key and click on the volume setting in the Quicktime player you can boost the volume up a few more decibels. The audio starts when Terry appears. Leave me a post if you would like me to email you the full version.

Help Wanted: Supply Chain Professionals

"We are seeing the highest demand for college graduates for entry-level logistics and supply chain positions in over ten years. But there are more job openings currently available than qualified candidates to fill them." This statement was recently issued by the the president of the Council of Supply Chain Management Professionals (CSCMP). I know I've covered this topic in the past in my blog, but this statistic is quite a wake up call. When I graduated in 1996, I heard the same thing about job opportunities in web site design and in Java programming, so I made sure I took these classes and landed a job right out of college. But the demand was well known. My question is, do students actually know about opportunities in the supply chain profession? Probably not, since only a handful of universities, such as Michigan State, Penn State, MIT and Arizona State offer classes and degrees, including online college courses. But the hype just isn't out there.

According to a webpage for the WP Carey School of Business at Arizona State, students graduating with a Bachelors degree in supply chain management can expect a starting salary between $35,000 - $55,000. Not bad, when you compare that to a survey by APICS, a manufacturing-oriented association, that surveyed 3,485 supply-chain members at U.S. companies who said on average they are getting $101,500 in salaries and bonuses. Not a bad living.

Want more proof? I just did a search on the job site Monster.com and more than 1000 postings came up, including these:

- Vice President, Supply Chain - San Francisco - $175,000 - $250,000
- Director, Supply Chain Operations - San Antonio - $80,000 - $90,000
- Director, Supply Chain, - New York City - $120,000 - $130,000
- Supply Chain Coordinator - Blue Bell, PA - $40,000 - $50,000

As an industry we need to get the word out that this is a career path that can be very lucrative.

C-TPAT for New York's Subway

On my ride home on the Q train last night, just after New York's Major Bloomberg announced a terrorist threat for the NY Subway system, it occurred to me that the NY Subway faces the same security issues that the global supply chain faces, which really puts it into perspective on how difficult it is to protect cargo, which in my case is me. Let me explain.

Think of the subway as a freight carrier, such as a cargo ship or a jumbo jet and the 468 subway stations in 5 different boroughs as the ports and countries receiving and shipping goods. And of course, the 4.7 million daily passengers represent the cargo. How do you ensure the safety of these passengers, with so many points of entry without delaying them? This is the same issue that faces the global supply chain and a company like IBM that ships its products to more than 160 countries. I don't think we have to look much further then C-TPAT.

I think US Customs has the right idea with C-TPAT and its green lane proposal, where basically a level of cooperation and trust is developed with US businesses that meet the outlined security requirements. After a company is C-TPAT validated they can get through ports faster will be eliminated from most searches. I think the same program should be put into place for the NY Subway system. It would work like this.

Each subway turn style, similar to the scanners at the airport, should be equipped with bomb and gun detection scanners. The typical tourist or bridge and tunnel New Yorker (a term for commuters that have to take a bridge or tunnel to get into NY City) would have to be scanned whenever they use the subway and are subject to regular searches. For the everyday commuter, that has an established residency in New York City and who provides the transit authority with his/her daily subway routine (for example I take the 4/5 in the morning and the Q home five days a week) they get green lane and can avoid scanners and searches.

I think this would secure the subway system to the level of security that NYC requires to avoid a subway bombing. Just like what could happen if a port closes, if a subway closes the ramifications are more than just an inconvenience. The businesses near the subway will hurt financially and the overflow to the other stations will bring them to their knees, which will lead to a domino effect across the entire city. This obviously intrudes on our rights as Americans, but that is a right I am willing to hand over.