[00:00] Radu: Now kind of moving slowly to the other segment which is around people talents. How do we address the global shortage of supply chain talent? Should the company start developing in-house talent and training programs to fill in the gaps? How would you do it? Obviously, talent sourcing is quite difficult nowadays, that’s why we still make money at Morgan Philips. What’s your thoughts on it?
[00:30] Paul: Well, we talked about how the industry’s going to change. But in order to get the new talent for our industry, we have to change the perception of our industry. So in supply chain Asia which Paul Lim and with Robert Yap and our board, we’ve had that discussion.
It’s non-profit made up of many of the industry players. And the first comment is we going to make the industry more exciting. We need to go to the colleges and we need to not have them think about warehousing and trucks and ships and just the old image of what our industry is about. We need to let them know it’s a sexy industry; it’s entrepreneurial industry.
There are so many different areas that you can be part of in this career path now. And learning the basics is there but also you can be an entrepreneur now. You can be a disruptor and have a career in the space or you can be inside of major company and help that company evolve with new ideas and new solutions which are endless in terms of your career. So we need to make the industry more exciting and more passionate when we market to the schools and we haven’t done a very good job about it frankly.
You know what I love was, I went to APL and they have the management training program and I took less money in spite of my student loans than I could have with American Express because I just wanted to learn the industry. But having to touch everything and then going to corporate headquarters and then learning under each vice presidents strategically, it made the industry exciting. And then coming out to Asia, and being involved in setting up new offices in different countries, that made the industry exciting.
One of the things I did in the early stage all the way back in NYK was we would take some of the brightest young talents in a different country and we would bring them for one year to our far east management center in Hong Kong and give them housing and tripled their salary, and we would have them work on regional projects for a year. Many of them became the country heads of NYK down the road, and some of them went out and started their own businesses like logistics, right? So even in those days, there were ways of making it fun and exciting.
But I think today, it is fun and exciting because it’s completely transforming. You have financial flow; you have information flow and you have product flow. These are the 3 components that connect the entire world, right? And now that product flow is fusing together with the information and the financial flow into completely new models, how is that not exciting? So we need to go into the schools. We need to do more internships to pull people into this industry.
And then we need as leaders in this industry – we have a moral obligation to build training programs and exposure and a career path for new generation talent because millennials get restless and they’re going to leave jobs if they don’t like it, if they’re not excited. Even in Silicon Valley, they flip all the time. One of the things we need to do anyways as part of this culture change is we need to do more team-oriented leadership structures. The old days of a few managers dictating down – that’s the old economy. Collaborative networks of talents within our organizations that can come up with creative ways of helping customers’ needs and also learning from each other at the same time. I think that makes the industry more exciting as a career.
[04:30] Radu: Absolutely. Actually that would have been my kind of link to my next question.
[04:37] Paul: Before you go there, I just want to throw in the old days. The old days of freight forwarding, I’ll leave out the name of the company but I was in the space where we had McDonalds as a costumer and Exxon and some amazing customers, but we had to, every quarter – we had to have new ideas, and new innovations for them. Even if we were performing perfectly, you had to have ideas every 3 months; otherwise they would say you are not innovative enough. Well, I got to a point after a few years where the managers we’re getting comfortable.
And they just said we’ve done all these, and there’s nothing more we could do. We’re performing beautifully and we really don’t think there’s more we can impact. And I knew that was unacceptable. So I’ve experimented and I created empowerment committees, and for one for one month and I took away the power from the managers. And I took the staff and I moved them into teams.
And I said, you will now drive new ideas without the manager’s influence and will get special bonuses to you with the best ideas. We came out with about 9-10 major new ideas and once that happened, the managers started coming up with new ideas. And then we went back to the structure but then we kept teams working on special projects. So even in the old days, you sometimes have to rip apart a structure in order to let new ideas and creativity break out.
[06:10] Radu: It’s the power of empowerment – power of empowerment is a repetition but it’s all true. I think to the point with the industry being sexy, I think a lot of people are trying to show more. It is interesting. People need to be more informed. I think we need to show more of that as an industry.
[06:44] Paul: One of the things of our supply chain community, supply chain Asia, which Paul Lim started, is the ideas getting competitors together, getting the major logistics companies together, getting the major shippers together and sharing ideas and sharing knowledge and helping to train the new generation and make it fun. So it works by the way. Connecting the communities, sharing the knowledge – it actually worked. And then as Morgan Philips, you’re in a very unique space because you now can help companies develop not only who to put into leadership roles that can transform businesses but you know your industry has to help them identify ways of changing their own organization and culture.
[07:33] Radu: It’s the bigger piece, you’re very right. It’s never about one specific recruitment. It’s the culture; it’s the strategic drive. Just a kind of looking back because there’s still some more details that we could go into. There is still currently a talent shortage. Definitely we need to work on making the industry more sexy, that’s for sure. In the market, what do you see are the biggest skills missing? Or hard skills? What do you think is missing?
[08:16] Paul: Well, I think, in fairness to Christian’s question, let me try to finish answering it because I did not do a sufficient job and I think part of this talent is it may not be in my company. It may in my interest to partner with some of these collaborative startups. So some of these talents won’t enter a bigger company but if we help nurture them with their technology or their ideas as small startups and bring them in as collaborative partners, that’s another way of helping our bigger organizations grow while leveraging the talent that won’t enter directly but will connect indirectly.
Now what’s missing in our industry? My biggest frustration – I started with shipping and then freight forwarding and then 3PL and then building one of the first 4PL models in Asia with Li&Fung and then in Arshiya we created railroad logistics parks but also the first 4PL in India.
And my frustration is most of the many people in our industry are still moving in comfort zones. They’re so busy in operations and the day to day activities and all the information requirements that they don’t see what’s happening. These changes that are coming and then it’s over there in the IT, that’s a separate group. We’re in a different stage. And people who use the word supply chain today are actually doing logistics. They’re not doing supply chain. So we’re not even defining our own business correctly.
When you do supply chain, you’re looking at sales forecast accuracy. You’re looking at the cost of capital. You’re looking at raw material, feeding to factory. You’re looking at production runs. You have to look at so many different activities unrelated to just physical movement of the product.
But I find so many people in the industry are using the word supply chain when they’re really talking about logistics or 3PL logistics. So we’re already not aligned in terms of our definition which has been embarrassing as an industry. So again, my argument is we already passed supply chain stage to man-chain is already what leading companies are doing and we’re now moving into dynamic value networks which is a whole different stage and that’s where the technology comes in heavily.
So I think one of our biggest skill deficits is that we are still having too many people in comfort zones and transactional zones – it’s a great phrase. Because they’re so busy and there’s so much going on but wow when this technology flip takes place in a few years, I worry where they’re going to be and how we protect them. And even the companies will be at risk.
So I think the biggest deficit is that too many people are in the transactional mode and they feel they’re making incremental progress. And you know they’re just not keeping up with the changes that are coming. And then you see Amazon out of nowhere blowing out major retailers across the US as an example. And then you see Ali Baba coming out to Asia now. And then what happens to all the retailers that are doing such a great job? It’s changed because you know we can still walk through a mall but they redefined that space.
Our space is going to be redefined as well and I just think we have a huge deficit. And the first one is that thinking. The second is the company’s leaders are not defining the forward vision aggressively enough. They’re thinking how to grow the business for the next year, for the next 2 years, but you know this is a big discussion we have even at the G20, the B20 meetings which was a lot of CEOs are thinking the next 2-3 years, incrementally that’s their reward structures. The boards are aligned to that. And even the executive recruiting firms are aligned to that because that’s your clientele.
But actually this is the period of transformation. You can’t just grow your business. You also have to transform it simultaneously. And then the second deficit that we have is we’re not creative enough. We’re not developing enough creative thinkers in our industry because our industry has always been structured and disciplined and moving things.
But now it’s completely dynamic and full of unique friction points that we have to start developing people who can be more creative in terms of looking at day to day activities, at looking at improvements for their customers and who can also penetrate their costumers’ business models and understand what they’re doing so that they can be more creative partners and helping their customers reduce cost, improve efficiency. I’m a big believer of putting staff on site with customers to integrate the culture and to become aligned in terms of what a customer needs. These are clear deficits to me.
[13:57] Radu: And its boils down to true partnership and actually truly understanding, being close to the client which of course that’s what everybody should do. And it’s true that some people are not doing it to this day and age.
[14:11] Paul: And you know what, in the past like in Li&Fung just from personal experience, we had an group logistics as a subsidiary of Li&Fung. We had some amazing customers like Sara Lee and Gilette and Diageo who actually said, let’s work together and let’s create some new solutions.
Let’s create some new models like the floating warehouse models which go all the way back to McDonalds and regional ways of playing with inventory and cost of capital on the water and we would bring product into a hub in Singapore and we’d use the water as a floating warehouse and then from this facility, we’d re-package, re-label, with assembly lines inside and we’d feed just in time to fourteen countries. It changes the entire landed cost of the product and it reduces lost sales, reduces loss of capital, so you know getting customers that you worked with so closely with staff on site that together you develop new solutions. That’s the ultimate fun in our industry.
End of Part 2