Maintain your “qualified” worker status by retraining every three years.

White House Skills Gap Pledge Falls Short, While Georgia Steps Up

Aug. 8, 2019
Georgia deserves kudos for their pioneering—and effective—effort at training their citizens for true employment opportunities and not just putting on a dog-and-pony show for the media.

Workers – from both the factory and office – should expect to have to retool their knowledge and skills at least once during their working years. Those who resist will no longer be able to compete in a changing economic climate. It is a challenge, however, for people to find and receive the necessary support to upgrade their job options. And because of this, it is difficult at times for businesses to find employees capable of filling their open positions. To this point, for decades private companies and governmental entities have attempted to fill this gap. The history of such efforts in this country has been uneven, at best.

Two articles this week illustrate this. The first shows how governmental support and engagement can have a positive impact on employee skills and company results. The second proclaims big promises but leaves one wondering “where’s the beef?”    

Georgia Workforce Development Done Right details a state financed program called Quick Start. Quick Start provides current and new employees training so that they can effectively fill today’s higher tech jobs. And the workforce training—provided through an employer—is at no cost, as long as that employer is creating new jobs.

This last point is important, at least in my mind. Many small- and medium-sized supplier manufacturers don’t budget much for employee training due to cost-down pressures. I once suggested to a supplier of mine having 50 employees or so that he spend $10,000 a year on employee training—what I thought was a paltry sum based on the size of his annual revenues. This was a manufacturer that, in fact, was having difficulty keeping employees current, with the right skills necessary to support his growing business.  The owner smiled at my suggestion and said he’d be willing to do so but would need my help. He went on to say that he spent about $10,000 each January for him and his wife to take a two-week Caribbean cruise. He went on to say he would gladly reallocate that money to upgrade the skills of current and new employees if I would convince his wife to give up her annual vacation. He further elaborated that his OEM customers focused to such an extent on piece-price in assigning business that his margins were too thin to budget much for training.

It seems that Georgia’s Quick Start program would be a remedy to this owner’s employee skills issue and yet allow him to maintain marital harmony!

The second 26 July article, White House Pledges to Train and Reskill Workers, sounds great at first glance. But as you read past the headline, the pledge amounts to no more than appealing to employers and trade groups to take this challenge on their own. 

Hmmm. Aren’t these the same employers that—like the ones cited above—are unable to budget much for training under current OEM source selection practices? And aren’t these same trade groups that have been talking about the subject for years (decades?) that haven’t really been able to move the needle on this issue? So it seems a little hypocritical to me that the White House would make their pronouncement relying on the same resources that haven’t—with the exception of isolated successes—been able to deliver results in this area. What is needed instead is federal and state economic development support that provides a more widespread, national impact, so that the job skills of America’s worker are considered a competitive advantage.

Georgia deserves kudos for their pioneering—and effective—effort at training their citizens for true employment opportunities and not just putting on a dog-and-pony show for the media.

More Visibility for Purchasing!

A recent article in American Machinist discussed how suppliers can more effectively differentiate their products and services from their competitors’. According to the article, the strategy is composed of two parts. The first, and something I frequently harp on, is a supplier being able to differentiate overall value above and beyond piece-price. The second is something I have not previously written on but is just as important as the first. Specifically, the need for a supplier to understand the metrics that a potential customer’s purchasing personnel get measured on as well as their general procurement process.

Last winter, I heard a story from a supplier-manufacturer that is pretty common, at least from my experience. This supplier was making no headway with their buyer contact at a large OEM. The approach they used was to detail the overall value they offered above-and-beyond piece-price. Eventually the buyer explained that the only significant metric of note in his annual performance appraisal was whether the year-to-year movement of piece-prices was either “up” (bad) or “down” (good). He went on to say that as long as it remained this way, buyers at his company would tend to source based primarily on piece-price.

Luckily for this supplier, the person who had previously been their buyer was now in purchasing management, and someone they felt they could appeal their current buyer’s sourcing decision to. Bottom line, in his new higher level position, he could now “see the light” that the value add should be considered in sourcing decisions. Further, he recognized that what this supplier offered would not only reduce his company’s own internal costs but would also probably result in a lower piece-price down-the-line. I’m not sure whether this had any impact on how that company evaluated its buyers—I doubt it—and  I wonder what that says about good supplier-manufacturers that don’t have the second option this one did.

It really isn’t that hard to measure the total value impact of sourcing with a specific supplier.  In fact, such impacts can usually be linked to the executive level metrics used at most companies to measure their own internal productivity and ability to react to changes in market demand.  In my opinion, most companies that judge purchasing employee performance based primarily on piece-price are practicing a type of dereliction-of-duty to their employers.

The article 5 Ways Suppliers Are Closing the Customer-Experience Gap calls out several good points. The one, however, that really caught my eye talked about creating the right team to address customer experience. Though supply management is not specifically mentioned, it is obvious from the article that its writer feels that particular function should be included on the team. It further points out that the important role purchasing plays in order fulfillment flexibility—an important factor in maintaining customer fill rates. Through articles like this, I’m starting to see a bit of movement away from purchasing’s current tactical status, toward it becoming more of a key player in an organization’s strategic planning process.

Tariffs, Ad Naseum.

The August article US Factory Gauge Sinks to Lowest Since 2016 With Exports Shaky shows that tariffs are slowing down the U.S. economy.  This is to be expected, i.e. “no pain, no gain”. The issue going forward—at least it seems to me—is whether China or the U.S. can suffer through the process until the other side blinks.

Paul Ericksen is IndustryWeek’s supply chain advisor. He has 38 years of experience in industry, primarily in supply management at two large original equipment manufacturers. 

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