As one of the key foundations for manufacturing, trade and growth, logistics is a strategic component of every economy. The sector can also contribute significantly to job creation. For example, in the UK, logistics is a $120billion industry that employs about 8% of the workforce. In India, it is a $160billion industry accounting for 22 million jobs, with employment growing 8% annually.
In 2016 and 2018, the World Bank’s Logistics Performance Index found that many developing countries face a significant skills gap in the logistics sector, especially at the managerial level. Similarly, several studies conducted in emerging economies such as China, India, and South Africa report shortages of supply chain talent.
In that context, emerging economies must tackle two critical challenges in order to develop a competitive logistics sector:
- How can governments plug the skills gap in logistics?
- How can the sector cope with the rapid changes brought about by technology, such as warehouse automation “freight uberization” or online platforms matching demand and supply, and their impact on the labor market?
1. Have a Systematic Program for Building Human Capital
Singapore, has recently launched a logistics skills framework. The government worked with companies to showcase the opportunities for professional development offered by the sector, for example from operations executive to general manager. A Logistics Industry Career Guide highlighting real success stories helps to inspire and retain employees, in a sector that often suffers from a reputation of poor progression. The guide also provides specific information about the set of technical and general management skills required for various occupations, from freight inspector to logistics manager (see example here). In addition, local training institutes have developed dedicated courses to help interested candidates meet the specific skill requirements.
Likewise, in Germany, the government has created a Freight Transport and Logistics Action Plan. One of the key initiatives is to ensure recruitment and retention of skilled workers by improving the image of the sector, informing potential recruits about the diversity of jobs available, and ensuring good working conditions. The government also awards the Freight Transport and Logistics Higher Education Prize to distinguish outstanding education courses.
2. Redesign Jobs Incorporating Technology
There is no doubt that the rise of technology will profoundly transform logistics. Innovations that are disrupting supply chains include transport asset sharing platforms, big data, the internet of things, blockchain, etc.
These sweeping changes are impacting many areas besides logistics. In fact, a recent McKinsey study spanning 46 countries estimates that up to 1/3 of all work activities could be automated by 2030. That means jobs across all sectors of the economy need to adapt.
With increased warehouse automation, for example, a warehousing executive may no longer need to spend as much time moving goods. Instead, the job could be redesigned to include responsibilities such health, safety and environmental compliance, inventory optimization, and oversight of specialized cargo such as perishables.
Aside from transforming existing jobs, technology will also, of course, create entirely new ones. From logistics big data analysts to drone operators or blockchain engineers, many of these emerging professions could be quite appealing to younger job seekers!
All this again underscores the importance of logistics training, for employees to exploit the advantages of job redesign. Employees should be taught technology management to augment their productivity.
Under its Human Capital Agenda, the Netherlands has developed an inspiring approach for disseminating knowledge about innovation and technology. The country has established six Knowledge Distribution Centers (KDC) across the country. Those serve as knowledge hubs within different parts of the country, allowing universities to work with various parties to advance knowledge about technology, and make it more accessible to students/the local workforce.
3. Encourage Multi-Stakeholder Collaboration- Everyone needs to pitch in!
Governments often have limited resources to conduct comprehensive national training programs themselves. Therefore, it is important to encourage all relevant stakeholders to pitch in: training institutes, logistics associations, private companies, and the employees themselves.
The Netherlands has developed an interesting feedback loop/virtuous circle between the industry, knowledge institutes, and the government. First, the government funds logistics institutes like the Dutch Institute for Advanced Logistics. Those institutes act as focal points for the dissemination of knowledge to the industry, and the industry itself, in turn, helps inform the content of the training.
In Singapore, the Logistics Professional Conversion Program includes classroom sessions delivered by training institutes, mentorship by seasoned practitioners, and structured on-the-job training by employers. Workers are encouraged to embrace lifelong learning, and participants train and work concurrently at the companies.
Germany is well-known for its apprenticeship scheme where employees are trained by their companies. The government regulates apprenticeships and define the standards, methods of training and assessment. Committees including representatives from employers’ associations and trade unions are involved and supervise the apprenticeship schemes.
A competent logistics sector is vital for well-functioning trade flows, which contributes to a stronger economy and better jobs. Let us invest in our future now, in our human capital and future livelihoods!
After this quick overview, which examples do you think are the most promising? How could other countries draw from these various models to build the sills of its workforce, embrace innovation, and reap the many benefits that a vibrant logistics sector can offer?