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Episode 41: It's Good to Be a CSCO

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Bob Trebilcock: Welcome to The Rebound where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Eshkenazi CEO of the Association for Supply Chain Management and Bob Trebilcock Editorial Director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now, to today's episode. Welcome to today's episode of The Rebound. It's good to be a CSCO I'm Bob Trebilcock.

Abe Eshkenazi: I'm Abe Eshkenazi.

Bob: Joining us today is Kevin Burns. Kevin is a Dallas-based partner with ON Partners, an executive recruiting firm. He has extensive experience placing supply chain executives in new roles. Kevin welcome.

Kevin Burns: Thanks, Bob. Thanks, Abe. Excited to be here.

Bob: Well, we're excited to have you. Thanks for joining us. This is really a great topic and probably on the minds of all of our listeners wondering should they quit their job and go to greener pastures? One of the things that ASCM does every year is a salary survey. We do one at Supply Chain Management Review as well. In 2021, nearly 60% of my respondents reported a salary increase of 9% or more. Now, from what Kevin sees in the market, that's probably chump change.

We all know that wages are going through the roof at the floor level, but for senior-level executives like our listeners, it's also an incredibly dynamic market. That's what we're going to talk about with Kevin today. Kevin, just describe the market for supply chain executives that you are seeing in your practice at a high level what's happening.

Kevin: Bob, thanks for that. It's an extremely hot market for supply chain leadership and we're really not seeing this let up anytime soon. As a practice here at ON Partners, we're up 90% in supply chain and operations searches year over year. A lot of that has to do with COVID. As COVID really brought supply chain front and center. You guys, and we have all seen labor shortages, capacity shortages, port congestion, you name it. On top of that, we have both seen strong and weak leaders as well.

Those who ran from the fire and those who shied away from it. The market for supply chain talent has really never been hotter. If I double-click there and go a little bit deeper when the pandemic broke out, we were talking with boards and CEOs around risk mitigation, how to plan for it, how to get better at global planning. Even in 2020, supply chain planning now sometimes called supply chain management was certainly one of our hottest roles.

Those who were planning experts who knew how to stand up global S&OP processes to address risk mitigation, address supply capacity, enhanced supply chain visibility, they were in the highest demand. Companies paid top dollar for it. We saw that with a strong planning function over the last couple years, some of this supply chain risk was addressed the moment COVID broke out. Now Bob and Abe, you fast forward 18 months, some of the hottest roles are in transportation logistics.

We're seeing eCommerce is up significantly due to COVID. Companies are looking for people who not only know air and ocean but also have experienced signing up middle and final-mile capabilities. As more of our smaller clients, our e-commerce clients are moving away from FedEx and UPS, they are looking for more regional players. They are looking for skill sets that have experience negotiating rates with regional players. It's a really good time for supply chain talent. From a candidate's perspective, just to conclude on that, it's never been hotter from a candidate's perspective.

It is a candidate's market and great talent is reaping top dollar for it. It's very common for top talent to get offers that are 20 to 25% higher than what they're currently making.

Abe: Kevin, you've talked a little bit about the roles and responsibilities. Oftentimes for career paths for supply chain, we've often seen different entry points and exit points for supply chain professionals. You can have a senior leadership in supply chain be in finance or ops, or you can have senior VPs. We've always indicated that the role of the chief supply chain officer sitting at the C-suite table was a critical role. Are those roles different as you're talking about the role responsibilities between a CSCO and a VP of supply chain? Or are they starting to converge now?

Kevin: It's a good question, Abe. I still think there's a lot of delta between what a CSCO does and what we're seeing as a SVP candidate does as well. I think all of us would agree the CSCO title relatively new. We would say it's relatively in the past five years, that is a newish title - retail, CPG, 3PLs. At least that's what we're seeing really paved the way here with this title. More recently, actually, it's encouraging more recently more of our industrial clients, our B2B clients. They are using this title is they are thinking about the future state and the future supply chain needs.

It is true that most CSCOs will come up with deep supply chain expertise, that is almost a table stake. One of the interesting trends we are seeing out there, Abe is that people in finance and people in IT are also starting to get the nod in the consideration for those roles. The reason being CSCO, the role is very strategic. These executives, these CSCO what we're seeing in the demand for it, they need to operate at a board level. They need to understand the financial impact of the supply chain.

They need to talk in terms of risk mitigation and P&L impact, but they also need to be up to speed on the latest technology and advanced planning tools on the market. That's where we're starting to see the IT folks starting to become more interesting. AI, machine learning. How that can possibly impact decision-making. Where to store inventory, what carriers to use, and what price? We're seeing a lot of that. On the other hand, you have the VP level too. What we're seeing there is we are seeing a tremendous need across all functions at the VP level, too.

Here at ON Partners, VPs we have recently placed, as I mentioned before, are seeing 20 to 25% wage inflation, which is causing a lot of adjustments in computations and titling within our existing clients. For instance pre-pandemic, the role that we'd go out for at a VP level was typically around 225,000 to 250,000 base salary. That same role is commanding 275,000 to 300,000 in today's market. Coupled with the fact that supply chain leaders are getting bombarded by recruiters.

We are still seeing this trend that some VPs won't even get on the phone with us without a better understanding of compensation parameters out of the gates. They don't need to, most of these A-plus talent VP levels, they are bringing multiple offers to the table. Even if we're reaching out to them, it is a competitive market for sure. Then there's this trickle-down effect to this too. If companies are paying top dollar and we're seeing this as well, companies are paying top dollar for attracting supply chain talent.

They are often faced with situations of leveling up their existing staff to keep them on par with new talent or risk losing them to a competitor. It is creating a lot of chaos there in the supply chain organizations, causing a lot of people to rethink how to retain and attract talent.

Bob: One of the topics that keeps coming up at the floor level is not just the challenge of recruiting and training, but retaining. Supply chain leaders have always been a little nomadic. I had a call earlier today where I said to someone, "Oh, I can connect you with the VP of supply chain at--" it was a large retailer. I looked online and that individual had been at that retailer for many years and was now in a different industry and had gone in like 2020 or something. I've read that the tenure for a chief procurement officer is about three years.

Given that they all are getting bombarded and you talked a little bit about how the professionals are responding, are they going to become either A, more nomadic? B, do you have any advice to the companies already employing the guy who's being or girl who's being bombarded with offers on how to retain them? What leads to retention in our space?

Kevin: It's a nice question, Bob. I think you're absolutely right. From a candidate's perspective, even though they're in high demand, we are starting to see some candidate fatigue. Maybe there's some retention tactics there for sure. The chief procurement officer would know it best. They've been in high demand for the last 10 years, chief procurement officers, that's a lucrative role. Typically for our clients, they come at us with a CPO need because they know it's in the first year it's going to pay for itself.

Both our Fortune 500 clients as well as our private equity clients, that need is still there. There's always this constant flux around centralization versus decentralization. Then you finally have some companies catching up on the category management, strategic sourcing initiative. We have seen the CPO in high demand. I think through this pandemic, another characteristic has really emerged and that's the ability to create long-lasting relationships. CPOs table stakes are transformational experience, bottom-line results.

It's the great relationships and those who had great relationships through this pandemic, especially on the CPO front did well. For instance one example, I have a Fortune 100 client right now, COVID was not too friendly to them. The CPO had a procurement, it was notorious for driving PPV and price concessions and percentages and what have you. A lot of the Asia-based suppliers with the scarce capacity that they had, they gave it to some of these smaller and medium-sized customers. That was mostly based on the relationship.

I would say the CPO, yes, it's in high-demand relationships still do matter. In terms of retention, I think what you're going to see here is it goes to your three-year comments. In terms of retention, at least what we're seeing CPOs are driven by transformation and by moving the needle and by growth. In the three-year mark, I would say that's typically how long a transformation can take to get off the ground to start seeing some rewards. Then when the CPO feels like there's no growth or transformation ahead or what's next.

When they don't know that, when that's unknown then you start having CPOs return our call and open to exploring new opportunities. From a retention standpoint, make sure you're checking in, make sure you are challenging these CPOs. It's not always about size of spend, it is about complexity and scope in making sure there is a path forward. In one of those paths forward could be that chief supply chain officer.

Abe: Kevin really interesting when you're talking about retention. If we flip the coin over and we go to the recruitment side, are you seeing anything different in terms of recruiting? Obviously, compensation is critical, but some of the other characteristics that you described in terms of being engaged in transformation, the collaboration across the organization is a critical part of a CSCO's responsibility, as well as communicating across a wide spectrum of time zones and cultures. Give me a sense, what are the most successful companies doing right now to attract talent?

Kevin: Great question, Abe. I think what we're seeing in this market is, the big winners in this market are those who can excel at three things. Really what I think this breaks down to is pay. Pay is still really important, geography, the flexibility, the remote working, that's two. Geographical, flexibility, and then speed. Speed would be number three. I think for pay, just real quick there, organizations who are losing out they are typically our larger customers. I'll define them as your Fortune 500 customers.

These organizations have pre-existing comp parameters, we're seeing they have strict salary bands. They are losing out on A-plus talent only because the market has been inflated so much over the last couple years. They're still stuck in their ways a little bit, they expect to bring in talent with their own compensation boundaries. What we're seeing in the market, candidates really have the upper hand here. Companies that are flexible in compensation or can get creative with total cash or longer-term equity, they're winning.

These companies are typically your private equity or venture-backed companies. They can sell the upside, they can sell the dream of a major cash windfall. It is still playing very well out there. Second, location matter. Clients that are flexible on location are absolutely winning the war for talent in supply chains. Relocation has always been tough but with the housing market the way it is and supply chain talent being very effective, working remote these past couple years. What we're finding is relocation is even more of a non-starter for top talent as it was pre-pandemic.

Just to give you an example, I have a venture VC-backed company based in Austin, Texas. Austin, Texas is absolutely a fantastic great location to recruit to, but now good luck finding a house in Austin, Texas. We're seeing stories and hearing stories of multiple bids, houses going well over asking price. This does factor into the equation of whether a candidate will take a role or not. Then finally, I mentioned speed so you have to be fast in this market. Any advice I'd give to future clients, ON Partners, or retain executive search firm, you have to move with a sense of urgency.

It used to be common for all of us in this space to bring a client four to five rock stars or A-plus talent. Have a client down-select a two and ultimately land on one. Now, I'm advising all my clients, if you really find a person that you love, you should sprint towards that candidate. You never know whether he or she is going to be available in two weeks’ time. For example, I recently lost out on a great candidate Fortune 500 company. We were in discussions with for 60-plus days.

He got an initial call from a private equity firm, nine days later, he was at offer stage and politely declined and moved on from our opportunity. Fortune 500 bigger clients, they have to move with a sense of urgency. They have to schedule candidates almost back-to-back day-to-day and I think that's what's winning in this market. It's really about pay, geography, and speed - sense of urgency.

Bob: Kevin, thanks for that. You talked a little earlier about the hot areas, meaning we started out with planning. As we're all having shipping problems, now transportation experience is one of the hot fields. I wondered for the listener who's thinking about whether they ought to dust off their resume. Whether it's planning or transportation, what's the level of experience or years of experience? If you're looking at a resume and saying, "Yes I could present that to a leading client of ours who's looking for a VP of supply chain."

What should the candidate bring to the table in experience?

Kevin: I think at the VP level, it's 15 years of experience, director it's 10 plus years of experience. As a recruiter, I'm not so concerned with years of experience, as much as I am with accomplishments. I think all of our clients are looking for how did he or she move the needle? What did he or she ultimately do? Or put another way, what wouldn't have got accomplished had he or she not been there? That's a question we're getting a lot and it's a question we're using in our screening calls.

We're really looking for accomplishments and moving the needle and so are our clients. Our clients are really not interested in people who are maintainers. I would say our clients are interested in more people that have that fire in their belly and want to create a lasting impact. Bob, you mentioned planning and transportation. Yes, those are absolutely our top two over the last couple of years. I would say within that if you did the double click people who have experienced standing up a global S&OP process and that is not an easy task.

Someone who understands what it takes to really influence business unit leaders, presidents, P&L leaders, and launching S&OP process, that is going to be in extremely high demand. You have all these advanced planning tools like Kinaxis, RapidResponse, Blue Yonder. if you have that on your resume, that is excellent. that's going to be in high demand. then just with e-commerce going back to transportation, e-commerce what we're seeing with our smaller e-commerce retailers is they are starting to get fed up with maybe the bigger carriers like the FedEx and UPSs.

They are expecting bigger or better prices, better service. What you're seeing is some market share coming away from those going into the regional players, the final miles, the middle miles. If you have that experience. If you actually have the experience negotiating contracts and negotiating rates and standing up regional models, that is in absolutely high demand right now too. The market is really hot for all of those functions.

Abe: Kevin, one of the areas that we focus on historically has been career paths or the lack thereof of career paths. Or if you go to the other side, the multiple career paths. We have significantly different entry points, as you indicated either from logistics or planning or procurement or from warehousing into the supply chain. That yet historically subject matter expertise used to be enough. If you were a functional expert, that was more than sufficient. You indicated before, predominantly finance and engineering professionals who migrated into supply chain.

Now with all the supply chain academic programs and given the skills that companies are looking for right now, are there specific skill sets that you think that the supply chain professionals are going to be? It's a necessary part of their demographic to even be considered right now? If you would talk a little bit about the role of DE&I, because historically as you indicated, a lot of individuals coming out of engineering and finance, predominantly white males. Not as diverse as we'd like to see within supply chain. Are there opportunities for DE&I within supply chain?

Kevin: It's an excellent point. We're seeing tremendous opportunities for DE&I for sure in supply chain. I think it's been a long time coming and rightfully so. It's diversity of thought, it's everything DE&I attributes itself to. With that said, we are starting to see a greater generation of diverse candidates in this mix, tremendous value there. I'm encouraged by that. For the future supply chain leader, it almost goes back into what I outlined the CSCO could be like today and in the future.

When I think about the CSCO, companies are realizing the supply chain can be a source of competitive advantage. They're pouring a lot of investment into supply chain, and I think we'll still see a demand for this. Yes, future leaders will be functionally deep, but they will also have cross-functional experience. Where diversity come into play, and actually I have this coming on air playing out in real-time today, is I have a head of supply chain search that I'm working on private equity-backed. I'm not looking for the functional leader.

I'm looking for someone who's spent time in sales, someone who's spent time in marketing, someone who's spent time in product development. It's the sales and marketing skill sets that impact better-planning organizations, and better-planning organizations can impact and further mitigate risk in case a pandemic hits or a future supply chain issue comes about. I like that. We obviously see more diversity in sales marketing. We're going to be doing our job to try and get them over to the supply chain function, but certainly, we're encouraged about where this is going.

The only thing else I would say is we're also starting to see a huge need for data and data analytics, operations research. This all blends itself into AI and machine learning. We're seeing a tremendous demand in those roles coming in, as well. I would encourage future supply chain leaders to get into the data, be hungry for the data. Understand AI, understand machine learning. That only sets this person up for really great success to really pivot around supply chain, detailed analytics, scenario planning, corporate strategy.

We're encouraged, we think there's a several more exciting years ahead.

Abe: As are we, Kevin, we see a significant opportunity for supply chain professionals at almost every level within the organization. Thank you very much. This is all the time that we have today. A special thanks to our guest, Kevin Burns, for sharing his perspectives and to you, our supply chain professionals, thank you for joining us today. We hope you'll be back for our next episode. For The Rebound, I'm Abe Eshkenazi.

Bob: I'm Bob Trebilcock.

Abe: All the best everyone. Thanks.

Bob: The Rebound is a joint production of the Association for Supply Chain Management and Supply Chain Management Review. For more information, be sure to visit ascm.org and scmr.com. We hope you'll join us again.

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