CEO Newsletters

Disrupting the Leadership Trap

August 2018
Authors:
Simon Popley, Senior Partner Leadership & Coaching, Logistics Executive Group
Kim Winter, Chief Executive Officer, Logistics Executive Group

Many in the logistics and supply chain sector routinely work more than 60 hours a week. How do you get out of this trap?

Leaders working in demanding roles tend to get little or no time to develop their own leadership ability. Focused on getting the job done and developing their own people, their own leadership growth often goes by the wayside. Australians work some of the longest working hours in the developed world, a study has found. About one in five Australians, or two million people, work more than 50 hours a week, the University of Sydney study shows, and many in the logistics and supply chain sector routinely work more than 60 hours a week.

Another trap that limits leadership development is underinvestment in the area by organisations. Research by Australia’s leading human performance technology specialist DTS International found that more than one in five companies (21%) have no leadership programs at all, while 36% of organisations are yet to establish a leadership development strategy. Only 58% of organisations spend more than US$1,000 per learner on training for senior leaders, compared to just 39% for high potentials and 32% for mid-level management.

The lack of investment – of both time and money – is at odds with a plethora of evidence that indicates the magnitude of potential returns. For example, a recent report by the Human Capital Institute states that organisations that allot more than 31% of annual training and development budgets to leadership development are 12% more likely to report increased revenue.

Train to survive
However, underinvestment in leadership development isn’t just a missed opportunity, it’s a major threat to a company’s long-term success. The fact of the matter is – when your leadership gets stale, so do results and the teams and leaders working with you. Everything becomes an effort and leadership feels like it’s sucking your will to live, rather than energising you and lifting up your people.

The fallout of neglecting your own leadership development is that you only have the same old skills, experiences and advice to hand down to your leaders and teams. It becomes a bit like leadership beans on toast, each and every night. After a while, the people to whom you serve your leadership learnings get bored and stop hearing the messages you want them to hear.

Your messaging is experienced as bland and your followers begin to feel that you have nothing new to offer or inspire them with. Preaching career development to them also invites hypocrisy that further diminishes your own leadership standing. This is demonstrated by the fact that only 7% of senior leadership in an international survey by Deloitte finds themselves capable of developing ‘millennial’ leaders, signalling an impending leadership vacuum. This vacuum often leads to team member disenchantment, poor staff retention, resulting in high turnover (in a traditionally talent short logistics & supply chain market) and unnecessary recruitment costs.

Here are a few practical ideas to assist you in developing some new thinking and raise the energy to revive your leadership.

Tips for revitalising your leadership

1. Set time aside to think about your current leadership – getting time to think about what changes you need and want to make is crucial. You may need to improve your ability to delegate work to be able to create this space to think: remember, thinking is working!
2. Ask for feedback from your direct leader and other leaders in your business – what areas do they see in which you need to develop further? What is it they most notice about your leadership? Feedback is the fertile soil in which great leadership grows, without feedback we cannot grow. Feedback can also be hard to process and deal with if you are unfamiliar with getting feedback – think about working with a coach to navigate this journey.
3. Discuss taking on new leadership challenges. Take on leading a new team or project. Get involved in a different work experience that takes you outside of your current comfort zone. If you are beginning to feel the slight discomfort of being outside of your familiar way of leading, you are probably beginning to grow – this is good pain!
4. Read some latest thinking and research in leadership development. Read something about leadership you would not usually look at, and share this with another leader.
5. Develop your ability to reflect on your own leadership experiences. Consider reflective journaling as a means to develop greater insight into your own leadership practice from viewing situations from multiple perspectives. Learn to become comfortable with the ambiguity that leading creates.
6. Find and join a leadership community of practice – build your own leadership network. The CEO Institute in Australia also organises various networking events, such as the CEO Connect Conference and the CEO Institute Summit that feature top industry leaders. Chief Executive Women is specifically geared towards empowering women through leadership networks that aim to close the gender gap in senior leadership roles across Oceania.
7. Attends events and conferences that are specifically geared towards leadership development, that offer the opportunity to learn directly and network with inspiring leaders in your field and beyond. A good example is the Annual Leadership Summits organised by the Australian Institute of Management across the country. Logistics Executive Group, an Australia-based international talent management and executive coaching firm, also organises year-round networking events, including a CEO Breakfast Series and the international LogiSYM Conference Series
8. Undertake some coach training to become a better-skilled coaching leader so that you are more effectively able to develop the potential of your own people.
9. Find yourself a qualified and experienced coach and begin a conversation about how to grow and develop your leadership capability.

Regardless of your seniority level and the nature of your organisation, effective leadership is necessary for your success, as well as the success of your team and your stakeholders. Therefore you cannot afford to let your leadership style get stale. Yes, it takes some time and some sweat, some investment on your behalf as well as your organisation and perhaps even the odd tear or two, but the reward is well worth the effort.

The most fruitful outcome is when your own leadership style becomes an example for others. This stimulates a domino effect as your mentees, peers and even seniors attempt to emulate your strategy and foster creative, productive and effective leadership across the organisation. Be the change you wish to be, as Gandhi said. The power rests with you.

Simon Popley
Senior Partner Leadership & Coaching, Logistics Executive Group

Simon is an executive coach and leadership development consultant with over 20 years of senior leadership and coaching experience in a wide range of industry sectors including health care, financial services, Government and consulting. Simon specialises is coaching leaders and executives who want to take their leadership to the next level of development. Simon has worked with a wide variety of clients in Government, private enterprise and the not for profit sector. Simon works and partners with both individual leaders and their teams.

Kim Winter
Chief Executive Officer, Logistics Executive Group

The founder of Logistics Executive Group, Kim delivers 40 years of executive leadership experience spanning Corporate Advisory, Executive Coaching, Public Speaking, Trade Facilitation and Executive Search & Recruitment across the Supply Chain, Aviation, Logistics, FMCG, Retail, Resources and Industrial sectors. Operating from the company’s offices in 12 countries. He is a regular contributor of thought leadership to industry and media, is a professional Master of Ceremonies, frequently invited to Chair international events on contemporary / future industry trends and leadership issues.

Leadership Development – Money up in Smoke?

July 2018
Authors:
Simon Popley, Senior Partner Leadership & Coaching, Logistics Executive Group
Kim Winter, Chief Executive Officer, Logistics Executive Group

Year after year, organisations invests large sums in an attempt to improve their leadership capability as a means to create organisational cultures which deliver for customers and shareholders. Whether the organisation operates within upstream or downstream, manufacturing, resources, operations, logistics or wider supply chain, in the majority of cases, many of these leadership development interventions deliver none of the intended promised changes in performance.

In recent years, Leadership Development strategy and programs have begun to find traction in the resources sector and throughout the Australia Supply Chain. However, poorly designed, deployed and executed, the failure of leadership development programs can actually result in increased organisational cynicism and a further decline in employee engagement, as employees perceive management wasting money they have been asked to cut or save.

Leadership development begins to be perceived as a waste of time, where leaders are seen to indulge themselves in management “love in’s” and off- sites in stylish hotels. The leaders who attend leadership development programs that fail to deliver can also be left feeling helpless, as despite completion of such programs they are still unable to cope with the demands their leadership roles expect of them.

When the promised changes do not eventuate, and when employees do not experience the change in leadership behaviours promised, cynicism and resentment are natural and predictable responses. If you want to understand how leadership development is viewed in your organisation – ask someone who is not privy to it. If the results of such programs are not visible here, it is likely they are not creating the change you seek.

New research from the Centre for Workplace Leadership at the University of Melbourne, Australia, funded by the Australian Federal Government on the state of Australian leadership was published recently. The findings point to mediocre leadership capability being a systemic issue leading to poor business performance across Australian organisations. Many of these organisations are global brands, some operating in the Gulf in the Petrochemicals space. Without too much of a stretch of the imagination, it is likely the findings might be similar for organisations in other countries as approaches to leadership development globally are not that diverse.

Why do leadership development programs fail?

If an organisation were a garden and you were the gardener, which plants would you give water and attention too? The new shoots, the seedlings and smaller plants or the mature trees? One of the key findings of this research points to a huge underinvestment in frontline leadership. For every $10 spent on senior leaders, only $1 is invested in developing frontline leadership. This has negative implications for creating a pipeline of future leadership and is impacting business performance.

Again imagine you are the gardener, conditions are harsh and you only have limited water and resources to spare. Do you pour it over the established trees? Or do you sprinkle it over your precious seedlings who have just broken through the soil? At the moment, from a leadership development perspective, we seem to be preoccupied with watering the trees, a strategy which has not delivered the required change. For organisations to flourish, it is clear we need to think differently about where investment is focused and how the development of leadership throughout the leadership lifecycle is approached.

Many businesses in Australia and NZ tend to be very hierarchical with most investment in the highest level of executive leadership. Treating leadership development as an elitist reward for making it to the senior ranks does nothing to move the organisation forward into a high performing space, focusing leadership development on so-called HIPO talent neglects the leadership experienced by the majority of employees in the organisation. Employees inherit failing unsupported leaders because the organisation does not consider them high performing. This is a perfect recipe for low employee engagement, something we are all too familiar with. It is also a dereliction of a duty of care to those employees. Ineffective leadership fails to serve the legitimate aims of the organisation and also fails to recognise the potential and of individuals and teams.

Designed to fail?

The way leadership development programs are designed and structured is a key reason why they fail to deliver the desired change in leadership capability. Many development programs focus on what is termed horizontal development that is the acquisition of new skills and information. The premise being that leaders lack the required skills and information, therefore to become effective leaders they need to acquire new skills and information. This approach is actually leadership training and should not be confused with leadership development, and it does have its place. Leaders need to acquire new skills and information as thinking in the leadership space evolves. However, it is not this acquisition of new information that builds inspiring leaders.

What fuels leadership development is exposure to real work situations where a leader’s perspective-taking capacity is challenged and where, as a result of the experience, the leader is able to appreciate multiple differing perspectives simultaneously. That is to say, the leader is now able to sit comfortably with situations others might describe as paradoxical. The development experience may be described as the “heat” in the experience, the leader is taken out of their own comfort zone where they are stretched into unfamiliar territory where growth happens. Exposure to being mentally stretched in real work situations provides leaders with the capacity to grow and develop, it is this realisation that cascades ongoing future development for many leaders. The knowledge that discomfort gives way to development and growth.

Many leadership development programs are designed without first undertaking an extensive diagnostic process that identifies the key issues within any system which limit the development of leadership talent. It is unlikely that a diagnostic process undertaken internally can deliver the required insight, the premise being you can’t see the problem if you are already part of it. Internal politics and power relationships may also bias findings which identify unpopular issues that require attention. This is not to say that an external diagnostic is not subject to bias. The promise of an ongoing business relationship with a leadership development provider may be sufficient to taint the messaging the provider communicates to an organisation. The organisation is given what it wants to hear rather than what it needs to hear. Perhaps the answer resides in a collaborative approach driven by a strong desire for authentic understanding?

Many third-party providers of leadership development programs are selling products and tools or what some term leadership systems. The sale of these products or systems forms the basis of the intervention. It is not necessarily what the organisation needs. It is unlikely that a range of leadership products will meet the unique needs of the organisation in question. It is not to say that certain leadership development tools are not useful, they can be. It is just to say alone they are not the solution to all leadership woes, buyer beware.

We have all heard the adage it takes a village to raise a child, well it also takes a whole range of other people to help create amazing leaders. Leadership development programs need to involve stakeholders as an integral part of the developing leader’s growth journey. Gaining feedback from these stakeholders regarding areas for development and also progress against set goals is a wonderful way to develop leaders and also a fantastic way to engage and build trust with key stakeholders, this is where being vulnerable builds capital in relationships.

There is a great pressure on leadership development practitioners throughout Australia & NZ, to deliver changed leaders quickly. Nonetheless, one must not forget that real change does not occur overnight. The industrialised world may have accelerated at light speed over the last 200 years, however, human evolution moves at a much a slower pace. Human beings are slow to change and change is hard for people to make. Leadership development programs need to be long enough to achieve the goals of development programs and embed new ways of leading. Leadership development programs that run over a few months have little chance of effecting sustained change.

There is also a need for support structures to be in place such as coaching and mentoring programs to support leaders while they make sense of new ways of seeing the world and embed those changes in the way they lead. Support is a key element of success in development programs, for many leaders being experienced differently by others is a painful process, support to develop new ways of leading and these new ways of sense-making of the world is key to success. The structures created by leadership development program need to be left in place once the program has ended to ensure leader growth continues, they should not be considered temporary structures.

Key elements of successful leadership development programs

1. Ensure a thorough collaborative diagnostic process is undertaken by an external independent party which creates a clear understanding of the systemic challenges facing developing leaders in your organisation.
2. Focus the investment where it will have the greatest sustainable impact on your pipeline of leadership.
3. Continually adapt your approach to leadership development, understand that any leadership development program needs to continually evolve. What might deliver success today may not deliver the same success tomorrow. Successful leadership development is contextual, always be aware of the context. Programs that adapt to changing conditions remain relevant and deliver results.
4. Leadership development programs need to be designed around exposure to real work situations. Real work situations provide the context and real-world experience for developing leaders where development can be directly translated into their daily leadership roles.
5. Successful programs provide differing ways for leaders to develop dependant on their individual needs and context. No one size fits all, the approach must be multifaceted.
6. Involving stakeholders in the development of leaders is a key element to assist in generating insight and supporting change. It is also a great way to build relationships with stakeholders.
7. Build and maintain support structures such as coaching and mentoring programs to support and embed new ways of making sense of situations and to help embed new approaches to leadership.
8. Identify clearly the ROI the BU / organisation expects from the program(s), initiate related agreements, and hold all stakeholders accountable for the investment.

Logistics Executive Group are celebrating their 20th Anniversary of engaging with customers to develop and deploy bespoke talent acquisition, leadership development and executive coaching programs from their offices throughout Australia, Asia, India and The Middle East.

Simon Popley
Senior Partner Leadership & Coaching, Logistics Executive Group

Simon is an executive coach and leadership development consultant with over 20 years of senior leadership and coaching experience in a wide range of industry sectors including health care, financial services, Government and consulting. Simon specialises is coaching leaders and executives who want to take their leadership to the next level of development. Simon has worked with a wide variety of clients in Government, private enterprise and the not for profit sector. Simon works and partners with both individual leaders and their teams.

Kim Winter
Chief Executive Officer, Logistics Executive Group

The founder of Logistics Executive Group, Kim delivers 40 years of executive leadership experience spanning Corporate Advisory, Executive Coaching, Public Speaking, Trade Facilitation and Executive Search & Recruitment across the Supply Chain, Aviation, Logistics, FMCG, Retail, Resources and Industrial sectors. Operating from the company’s offices in 12 countries. He is a regular contributor of thought leadership to industry and media, is a professional Master of Ceremonies, frequently invited to Chair international events on contemporary / future industry trends and leadership issues.

Trade Wars and A Digital Revolution – How will Global Trends Impact Emerging Markets in 2018?

March 2018
Author: Bushra Ali, Business Intelligence Specialist, Logistics Executive Group

While the most qualified soothsayers anticipated a relatively smooth-sailing 2018 for global markets, recent signs of a ‘trade war’ between the US and China has rolled back some of the cautious optimism that started off the year, especially for emerging economies.

As global stock markets take a foreboding plunge and capital flight seeks safer pastures, emerging market assets have taken the largest tumble. Unsurprisingly, Asian manufacturers have been worst hit, with mainland Chinese equities dwindling 3% in the past week since the impending (but temporary) US tariffs will directly hit China’s annual $60 billion exports to the US. The Turkish lira has also gotten caught in the cross-fire, tumbling to record lows against the dollar and euro this week.

While it may be too early to anticipate where the war of words between two economic superpowers will lead this time, it is tempting to believe that the threat of ‘deglobalisation’ is here to stay and unravel the decades-long boom that has benefited many rising tigers, especially in Asia. The resurgence of populism and its protectionist agenda in the US and Europe inspires pessimism in rising economies that have long banked on the developed world as their biggest export markets.

In such unpredictable times, what is one to make of the relatively sundry forecasts that started the year, particularly for the logistics and supply chain industry? In order to reconcile these with current circumstances, it is important to consider the evolving position of emerging markets in the context of the global economy.

Developing economies have long been the rising stars of the global logistics and transport industry. This is by no means a coincidence. The supply chain industry is an important component of the economic growth and maturity of a country, facilitating domestic and international trade, the development of competitive advantage in key industries, and the opportunity to diversify and foster capability in new industries.

This decade, we have already witnessed important milestones that indicate the rising significance of logistics and supply chain activity – both cross-border and domestic – in the developing world. One example is Asia becoming the largest 3PL market in the world (by annual revenue), outgrowing both Europe and North America. Another is Africa’s lead in global air freight demand growth for the past several quarters.

The growing significance of the logistics and supply chain industry in developing regions that are home to the majority of the world’s population indicates an opportunity that has so far mostly been tapped by dominant global players. However, as governments realize the strategic value of the sector and seek to play a greater role, the playing field has evolved and made way for domestic players that are not only competing with global leaders, but also forming strategic partnerships to capitalize on pooled competencies and resources. Public and private investments in logistics and supply chain continue to grow, and governments are also taking an increasingly active role in amending regulations and legislation to boost this further. The most recent example of the latter is India’s implementation of a nation-wide Goods & Services Tax (GST) that has ironed out inconsistencies and confusion caused by state-to-state variation in legislation.

Consequently, emerging markets are increasingly able to diversify their risks and dependencies, particularly in the logistics and transportation sector which is being recognized for its ability to support the development of other sectors. As noted in the 2018 edition of the Agility Global Emerging Markets Index, developing markets are buying a larger share of each other’s exports and integrating their production. This is especially true in Asia, where China’s neighbours have significantly benefited from setting up ancillary industries to supply and facilitate China’s manufacturing boom.

While much of manufacturing activity in the developing world continues to serve the export market, there are still signs of rising domestic consumer appetite. The emergence of e-commerce and development of domestic logistics infrastructure have been key factors propelling these consumer markets, while the development of new urban centres across China’s long-neglected Western region creates opportunity to multiply economic activity across new hubs.

Many emerging markets have adopted similar strategies to foster investment opportunities and diversify their economies, with Saudi Arabia announcing its largest public budget among a series of other socio-political and economic reforms this year and even Africa stepping up its game with the development of new e-commerce-oriented logistics infrastructure across key economies. Furthermore, the progress of China’s Belt and Road Initiative offers the promise of creating new avenues for trade and stronger regional economic ties in the Global South.

One especially interesting and relevant trend is the opportunities digital disruption is creating for emerging economies. By playing an increasingly important role in pioneering technologies that shall likely define the future of logistics, developing markets are not only enhancing their own competitive advantage through the optimisation of supply chain activities, but also adding more value and creating new, complementary industries. “For many years, emerging markets have aspired to move up the value chain and reduce their dependence on the West,” John Manners Bell, CEO of Transport Intelligence and Lead Researcher for the report notes, adding, “It seems that this is now starting to happen.”

These developments clearly indicate a shifting dynamic between emerging markets and developed economies. However, it would be naïve to assume that this assures the former’s immunity to potential friction and trade battles that loom on the horizon. Perhaps the most important signifier of their true robustness will become clear in the wake of short-term shocks that have already begun to ripple through emerging equity and asset markets.

Nonetheless, it would still be reasonable to allow the uncertainty to foster more hope than fear that, in the long term, the re-negotiated terms of trade between the developed and developing world will foster a dynamic that is better for all. After all, the issue at the heart of the current dispute – lack of adequate protection for intellectual property– is pertinent to the continued success of developing economies as well, particularly as innovation becomes an increasingly strategic part of their competitive advantage in global markets.

In the meantime, what can you – as an organization dealing local, regional and global economies – do to ensure you are well-equipped for the bumpy road ahead? The first place to start would be a thorough health check to ensure that your supply chain is performing to best practice standards and that you have a detailed understanding of where further efficiencies can be realised and/or leverage obtained to capitalise on new market opportunities.

Indeed, there couldn’t be a better time to conduct a supply chain audit to review processes and understand where the next cost driver is going to come from in the wake of ongoing transformations. For more information on how you can undertake this assessment with our team of qualified and experienced international experts, feel free to reach me at bushraa@logisticsexecutive.com.

Sources:

Agility Global Emerging Markets Index

http://slideplayer.com/slide/1619715/

https://www.reuters.com/article/emerging-markets/emerging-markets-emerging-assets-tumble-as-trade-war-fears-balloon-idUSL8N1R51KJ

https://www.forbes.com/sites/kenrapoza/2018/03/23/hawkish-fed-probably-worse-for-market-than-china-trade-war/#114daf155014

Bushra Ali
Business Intelligence Specialist, Logistics Executive Group

Bushra Ali is a business intelligence specialist at Logistics Executive Group in the Middle East. She has a degree in Economics and Chinese from Williams College, Massachusetts, USA. She specializes in market research and economic analysis using qualitative and quantitative tools including STATA, R and Python. Her past research spans topics including behavioural economics, consumer behaviour, renewable energy markets, education and social entrepreneurship. Her research has been published by the London-based Overseas Development Institute (ODI). In addition to English, she is fluent in Mandarin, Arabic and Urdu/Hindi.

New Beginnings are Overrated. Let 2018 be Your Turning Point.

January/February 2018
Author: Bushra Ali, Business Intelligence Specialist, Logistics Executive Group

The industry slowdown from the past few years has indicated the best response to a crisis is neither abandoning ship nor refusing to change course. It is simply the ability to reevaluate your position and pivot if necessary in order to avert risk and minimize losses.

Welcoming the new year is always a bit more complicated than it seems. At first, there’s a sense of unbridled optimism and excitement inspired by the cheerful fervor of the December holidays. However, once the mist from the fireworks has disappeared into thin air and it’s time to return to business as usual, there’s always the slightest hint of scepticism, if not outright dread – what’s next?! And what will it mean for the industry bubble I inhabit?

The global logistics and supply chain sector has been struggling to reconcile mixed signals since 2015. The combined effect of falling oil prices, Brexit, the dawn of Trumponomics and a manufacturing slowdown in key Asian markets have caused the industry to exercise caution and shift gears in a bid to remain profitable and achieve targets for growth and expansion.

However, macroeconomic trends and forecasts for 2018 to 2020 indicate that many of these pressures are expected to ease somewhat starting this year, with rising economic and industry-level transformations providing new opportunities to overcome the challenges of previous years. For example, oil prices took off on the strongest note since mid-2015 this January 1st, while the rise of decentralized technologies such as blockchain offer the possibility to circumvent bureaucratic inefficiency and dramatically improve supply chain visibility. New emerging markets, particularly in the Middle East (Egypt, Oman) and Africa (South Africa, Nigeria, Kenya) have risen to prominence and opened up fresh avenues for growth. The hype around artificial intelligence (AI) is finally beginning to pay off with a range of new machine learning applications making it possible to overcome skill and labour shortages and optimize processes for significant gains in business performance.

With internet penetration rates rising rapidly across the developing world, vast untapped opportunities are fostering appetite for global expansion among both established players and fledgling entrants. Rising M&A activity in the logistics and supply chain sector across Asia and Africa indicates that there is opportunity for both types of players to work in tandem in the quest to conquer uncharted territories. According to PwC, 2017 saw a total of 248 transactions take place in the global transportation and logistics sector, a rise of 18% in volume and 5% in value compared to 2016. With the explosive rise of e-commerce across the globe, it comes as little surprise that e-fulfillment remains one of the most competitive, sought-after yet challenging avenues for growth and profitability. At the same time, rising infrastructure investments across Asia and Africa also provide attractive possibilities for the development of logistics and supply chain sectors in these regions.

These promising developments should be enough to cause one to breathe a sigh of relief and trust that the worst of this decade is past.  However, the shake-up of the past few years, and the winners and losers that have emerged in its wake indicate that neither unbridled dread nor hopeless optimism is the key to robust business performance. Rather, it is a commitment to systemic adjustments and strategic realignments that allows a business to succeed in an industry that is highly vulnerable to both macroeconomic shocks and digital disruption. In other words, the best response to a crisis is neither abandoning ship nor refusing to change course. It is, very simply, the ability to re-evaluate your position and pivot if necessary in order to avert risk and minimize losses.

“It is also important to keep in mind that sometimes the best answers do not lie within, and a fresh perspective from the ‘outside’ can not only make way for more objective insights and holistic analyses, but also specialized recommendations and a window into the successes and failures that have defined other partners and competitors in your industry,” notes Darryl Judd, COO and Global Director of Corporate Advisory services for Logistics Executive Group. Judd notes that the use of business intelligence and market experts has become increasingly relevant to the logistics and supply chain industry as industry leaders world-over see these resources as crucial to keeping up with rapidly evolving markets. “Our clients are also increasingly recognizing the importance of drawing on benchmark data, such as those found in Ti reports, to understanding business performance in the context of the wider industry,” Judd further highlights.

Logistics Executive Group has been conducting supply chain audits, designing and equipping modern facilities and pioneering supply chain improvement and optimization programs for a variety of logistics and supply chain players across the world for the past three decades, using internal resources and expertise that are costly for organizations to acquire on their own.

Another instrumental piece of the equation that one can no longer afford to be sidelined is the strength, quality, productivity and agility of an organization’s workforce. “Technology in the hands of talent that is not adequately qualified, agile or equipped to succeed is akin to handing a Ferrari to a first-time driver – excessively risky and expensive,” asserts Kim Winter, Global CEO of Logistics Executive. “Disparities in business performance and success between overachievers and underachievers in the sector is strongly correlated with the talent attraction and management strategies of a firm,” he adds, citing the recently published World Bank special report on the human capital challenges facing the logistics and supply chain industry globally.

One of the key challenges noted in the report is the lack of capacity and capability to develop a targeted and successful talent strategy can be challenging for both large-scale multinationals with expansive geographic footprints and smaller LSPs. “This is the problem we saw nineteen years ago when we established our recruitment and human capital consulting division at Logistics Executive Group,” notes Winter, adding, “Today our specialist expertise in the area appears to be more relevant than ever, and we feel very well positioned to harness our own global experience and footprint to help our clients develop targeted and successful talent attraction and management strategies within a wide range of geographies and industry segments.”

Digital transformation is really only the tip of the iceberg when it comes to the changes, opportunities and threats that loom on the horizon for the global logistics and supply chain industry. Shifting socio-political dynamics and their interplay with economic factors, and even evolving cultural norms are inspiring moments for pause and reflection from board rooms to warehouses to cargo docks. Perhaps it’s time to take a look around the room and wonder about the ones still around, whether colleagues, well-wishers or competitors. Clearly, each of us is doing something right if we’ve survived recent storms, and perhaps in the coming few years if we were able to pool those strengths together through the right talent and strategic advice from known industry experts, we may even be doing significantly better.

Bushra Ali
Business Intelligence Specialist, Logistics Executive Group

Bushra Ali is a business intelligence specialist at Logistics Executive Group in the Middle East. She has a degree in Economics and Chinese from Williams College, Massachusetts, USA. She specializes in market research and economic analysis using qualitative and quantitative tools including STATA, R and Python. Her past research spans topics including behavioural economics, consumer behaviour, renewable energy markets, education and social entrepreneurship. Her research has been published by the London-based Overseas Development Institute (ODI). In addition to English, she is fluent in Mandarin, Arabic and Urdu/Hindi.

Averting a Human Capital Crisis in Logistics and Supply Chain Management

September 2017
Author: Bushra Ali, Business Intelligence Specialist, Logistics Executive Group

As technological innovation and automation takes centre stage in the world of logistics, there is one crucial component of success in the industry that is alarmingly in danger of being overlooked. The first of its kind investigation on the effectiveness and competencies of human capital in logistics and supply chain management by the World Bank has revealed that the shortage of qualified labour is one of the key constraints facing the sector in both developed and developing countries. Moreover, there is little attention being paid to the strategic management of human resources necessary for effective recruitment, retention and training of staff. Authored by experienced academics at the Kühne Logistics University in Hamburg, Germany, the report notes that between 2001 and 2005, HRM issues were discussed in less than 5% of the articles published in the three leading logistics journals.

The research, which utilized data from an online survey of logistics companies worldwide as well the World Bank Logistics Performance Index from 2016, confirmed that the shortage pervades all occupational levels in the industry. However, there seems to be little uncertainty about the factors that contribute to this shortage. The lack of prestige and perceived lower status of operational logistics workers seems to be an almost universal phenomenon, making it difficult for the sector to attract the cream of the crop in terms of talent. Moreover, this poor cultural perception also affects the retention and performance of existing workers, who seem to demonstrate lack of discipline, motivation, attention to detail and commitment to learning necessary for consistently effective performance.

At the administrative and operational (‘blue-collar’) level, survey results indicate that staff tend to be particularly lacking in their knowledge and receptiveness to training. Most interestingly and pressingly, however, the report highlights that the lack of personal skills, as well as leadership and management skills is especially acute on the managerial and supervisory levels. Since staff at these levels are often recruited from the lower rungs based on technical skills and knowledge, they often lack the training and leadership experience necessary to make strategic decision and long-term plans.

The problem is of special concern to emerging markets with rapidly expanding logistics sectors, and current leaders are aware of it. “The World Bank reports highlights a problem that isn’t necessarily unknown to the industry,” noted Kim Winter, CEO of Logistics Executive. “However, it provides profoundly useful insight into the depth of the crisis that makes it clear that a more proactive approach to human capital development is integral to meeting year-on-year growth targets for the industry,” he added.

The clear majority of survey participants highlighted recruitment at the managerial level to be the biggest HRM challenge they expect to face in both developed and emerging regions in the future. This is seconded by concerns about the ability for firms to keep salaries and benefits competitive in order to attract the best talent. Succession planning and the provision of adequate training follow.

Based on these findings, the authors of the report discuss numerous potential strategies and solutions to help leaders in the industry cope with these human resource challenges. They urge managers to invest in employee retention through training, the improvement of working conditions, more competitive salaries and benefits as well as defining a clear and lucrative path for career advancement.

They also propose significant adjustments to training endeavours, especially in developing markets, with input from 36 experts in logistics education and training from major world regions who were also interviewed for the project. One of the most important among these is the move away from internal training to a healthier mix of both internal and external resources. While most firms in both emerging and developed regions indicated that they already offer such a mix, evidence suggests that developing countries tend to more frequently opt for internal programs that deviate little from ‘on-the-job’ instruction. Materials, resources and approaches utilized in most training programs also tend to be outdated, and do not focus on preparing employees for the adoption of new technologies that must inevitably be introduced for the business to remain competitive in the current landscape.

However, the quality, accreditation and applicability of external resources must also be carefully gauged before they are utilized for training purposes. As is an established best practice in the industry, the researchers encourage managers to seek programs offered by reputed logistics associations, including the Chartered Institute of Logistics and Transport (CILT), European Logistics Association (ELA) and The Association for Operations Management (APICS). Such programs offer the additional benefit of association membership, which can be an effective motivator and also facilitate career development for company employees. Industry associations such as the Logistics Supply Chain Management Society (LSCMS) also offer numerous training and certification programs that are up-to-date and incorporate a wider range of specialist expertise that can be offered through an internal program.

Another increasingly popular avenue for external training is private enterprises that offer tailored programs for a variety of crucial skills and competencies in logistics. An example is Logistics Executive Group’s Logistics Academy, that offers internationally accredited training programs ranging from specialized short courses, certificate based and diploma e-learning products to MBAs in collaboration with reputed partners including the Australia Logistics Academy (ALA), Council of Supply Chain Management Professionals (CSCMP) and SMC University.

While hand-on learning experience can be gathered on-the-job, it can be further facilitated through games and simulations, such as McKinsey’s famed Model Warehouse approach, and even VR technology. Such measures can help business maximize efficiency in the longer run through the prevention of costly mistakes as well as faster gains on worker efficiency.

Nonetheless, the upfront cost of investing in such training endeavours remains debilitating for most firms in emerging markets. This is especially given the dispersed nature of these markets, in that they are often dominated by MSMEs who do not have adequate resources to spare and cannot reap the benefit of economies of scale in the long run. Furthermore, smaller companies are also often bootstrapped to the point where they cannot afford to divert employee time and attention from revenue-generating activities. However, a recent surge in M&A activity in many of these regions, including MENA, China, India and Latin America suggests that these markets are already in the process of responding to these pressures through consolidation.

The rise of international 3PLs also bodes well for addressing the lack of adequately trained staff in the sector. In order to offer specialized services and expertise for various regions, 3PLs already have the incentive, and increasingly, the scale, to set aside relatively generous training budgets for their employees that also prepare employees to adjust to local and environmental factors in different regions. However, since logistics is a “boundary-spanning” activity, human capital errors and inefficiencies at any point in the supply chain have consequences for the overall performance of the firm. Therefore, firms must be cautious about relying on outsourcing part of their activities to iron out human capital inefficiencies across the entire pipeline of their operations.

Finally, given the crucial role logistics and supply chain management plays in the performance of most economies, the public sector in both developed and developing regions cannot afford to remain detached from the sector’s current and, most likely prolonged, human capital crisis. Among the most useful steps governments could take include establishing coherent regulatory frameworks and competence standards for the sector as well as investing in vocational programs and public-private partnerships that promote training and skill development. In fact, the latter (establishing quality vocational training and apprenticeship programs) is cited as the main factor behind the success of various European countries, including the UK and Germany, in mitigating their human capital crunch.

Bushra Ali
Business Intelligence Specialist, Logistics Executive Group

Bushra Ali is a business intelligence specialist at Logistics Executive Group in the Middle East. She has a degree in Economics and Chinese from Williams College, Massachusetts, USA. She specializes in market research and economic analysis using qualitative and quantitative tools including STATA, R and Python. Her past research spans topics including behavioural economics, consumer behaviour, renewable energy markets, education and social entrepreneurship. Her research has been published by the London-based Overseas Development Institute (ODI). In addition to English, she is fluent in Mandarin, Arabic and Urdu/Hindi.

Partnering to Meet Australia’s Logistics Infrastructure Challenge

October 2017
Author: Darryl Judd, Chief Operating Officer, Logistics Executive Group

The miraculous narrative of China’s success as a country that has dragged itself from a third world status to today’s economic powerhouse, has been the greatest most awe-inspiring economic success story of our generation. Since the 1990s China quadrupled its 1 million kilometres of highways and built a high-speed rail network from scratch, which it plans to extend to 30,000 kilometres by 2020. The sheer size of the stations, their efficient management and the fast trains that run up to speeds of 300 kilometres an hour are a testament to China’s extraordinary infrastructure build over the past two decades which has become representative of the country’s rapid economic development and improved living standards across the country.

This achievement has been copied by other emerging economies, such Singapore and Dubai. They share a commonality as their dictatorial governments employ long-term strategy views, devoid of the restrictions imposed by the short election cycles of Western democracies. This affords them the ability to formulate long-term plans, rather than the drawbacks of short-term election cycles which divide world democracies such as America and Australia.

The Chinese government can afford an expansive certainty of governance and policy direction that spans decades, not the few years allowed by a political term. They can make the tough, unpopular decisions independent of populist support. China can, therefore, afford to invest in infrastructure as a key driver of economic growth, not just to fix short-term problems. This investment in infrastructure is protected by a $US 3 trillion in foreign currency reserves, which China was able to accumulate over its 30 years of export success. Whenever exports slow, the Chinese bolster economic activity by investing in infrastructure. In this way, they can continuously maintain a steady level of economic growth.

Since the end of 2007 and the onset of the GFC, the Renminbi (RMB) has appreciated considerably against a range of major currencies. This has, in turn, strengthened the purchasing power of Chinese investors, as overseas investment has become relatively cheaper.

One Belt One Road
In keeping with their long-term view, China’s “Belt and Road Initiative” is the most ambitious strategy ever to be undertaken. This underlying ambition behind the “Belt and Road” is to build better trade routes, including infrastructures such as roads and rail networks, between Asia, Africa and Europe so they can raise 850 million Chinese, or one-eighth of the world’s population, into the middle class by 2030.

The Chinese government has called on countries along the proposed routes to establish a secure and efficient network of land, sea and air passages, lifting their connectivity to a higher level. A staggering $US3 trillion ($4 trillion) in foreign currency reserves, accumulated during more than three decades of China’s stunning export success will fund the project.

Already examples of China’s infrastructure success with the “Belt and Road” abound. From a new deep water port in Kenya to railways throughout East Africa and roads and hospitals in Guinea-Bissau. The figures are vastly unfathomable, with the Export-Import Bank of China financing trillions in financing, including direct investment, soft loans and commercial loans.

The amount of money invested into Asian infrastructure between 2015 and 2025 will be worth about 60% of the world’s infrastructure spending.  According to PwC and Oxford Economics, in roads alone, the Philippines, aided by Chinese investment, will increase its infrastructure spending by about 300% between 2010 and 2025, and China about 250%.  In fact, many countries in Asia, in particular, seem to be competing for Chinese investment.

Projections by the OECD suggest that Asia’s share of the global middle class will grow from around 35% in 2015 to 80% by 2050.  The result is that the long-term strategic partnership with China is fast pacing the development of the Asia market compared with Australia.

While the Australian economy is attractive, it is losing its market share due to lack of infrastructure investment. Australia’s solid economic performance, a diversified economy and low-risk environment bode well for business, with 26 years of uninterrupted economic growth and a AAA sovereign risk profile.  Australia is well placed, as even though it is home to only 0.3% of the world’s population, its GDP accounts for 1.7% of the world’s economy.

However, the imposition of short-term policy windows as a result of changing governments and lack of bipartisan support, means that investment in infrastructure has suffered. The political landscape only allows for a horizon of 3 years between elections (in recent times even less). Policy direction and investment vacillates severely every few years with the rise and fall of governments. As a result, there is a long-term neglect of significant asset investment and a lack of cohesion and strategy in infrastructure management.

According to the Australian Bureau of Statistics, China now ranks as Australia’s fifth largest investor with 4% of investment stock.  It sits behind the United States (24%), the United Kingdom (13$), Japan (10%) and the Netherlands (6%), equal to Singapore (4%) and ahead of Canada (3%).

Mining remains on China’s investment agenda. A total of AU$1.29 billion was invested in the sector in 2015.  This makes the Australian infrastructure sector attractive to Chinese investors, with recent ventures including the 99-year lease of the Darwin Port to the Landbridge Group for AU$506 million.  The port acquisition followed Australia’s first investment as a country in over a century of over $1.3bn in a railway linking South Australia and the Darwin port which was first planned more than a century ago.  While many critiqued the project within Australia, it was ground-breaking in terms of the extent to which Government was able to incorporate private sector financing.

While such investment by the Australian government is impressive, it comes nowhere near that of China.  This may be why the country was not included in initial versions of the One Belt One Road Strategy when it was initially announced in 2013, even though Asia presently represents 10 of Australia’s top 12 export markets. There is an urgent need for investment and a comprehensive National Freight and Supply Chain Strategy to guide infrastructure investment and reform, if Australia is to realise its place as a competitive Asian Trade Partner.

Mark Birrell is the chairman of Infrastructure Australia, and he says that greater foresight will be essential when it comes to infrastructure planning in order for Australia to have a thriving economy over the long term.

“Infrastructure has to be developed and planned with a long-term focus”, he says, “Avoiding the problems of previous election campaigns where projects were developed in isolation and the needs of infrastructure users gained little publicity.”

Australia’s infrastructure problems are only going to increase.

Road Freight

As a major producer and exporter of bulk commodities and other merchandise, Australia expects road freight to grow by 50% and rail freight to increase by 67% to 2030.  Rail freight growth is driven by continued growth in mineral and agricultural exports, and demand for consumer goods driven by population growth.

Domestically Australia is experiencing unprecedented population growth with the country on target to expand to more than 30 million people by 2031.  This will mean that the population of Australia’s four largest cities, Sydney, Melbourne, Brisbane and Perth will increase by close to 50%.

Total domestic land freight is expected to grow to service this population by 80% between 2011 and 2031.  As favourable as this sounds, such rapid growth may result in increasing major transport disruption and delays if there is not an equal investment in land freight infrastructure.  It is critical that this is addressed as the annual cost of congestion in capital cities could exceed $53 billion by 2031, up from $13.7 billion in 2011.

Domestically, the majority of economic activity occurs in the country’s major cities, according to the Australia Infrastructure Audit, which found they contributed $854 billion to the economy in 2011 and are projected to add $1,621 billion in 2031.  Investment and reform are therefore desperately needed to increase capacity and better manage domestic demand.

The Australian Logistics Council has estimated that the logistics industry contributes close to 14.5% of GDP annually.  Spending on infrastructure in this area will, therefore have a compounded benefit on the Australian economy.

Rail

The percentage of freight carried on rail is static or declining as far as Australia’s capital city ports are concerned. This is juxtaposed with the well-documented projection that the freight task is expected to double in the next twelve years or so.  As a result, congestion is set to cost $20 billion by 2020 if no action is taken and, according to the latest ABN Amro report, between $380 billion and $455 million will have to be spent on public infrastructure over the next 10 years.

Shipping

Australia is not prepared to cope with these challenges with major container terminals, for example in Melbourne reaching capacity.  In the next decade 6,000 TEU container ships will be calling into Australia compared to the current levels of 4,500 TEU vessels at Australian ports.   This growth will challenge the current decline of general cargo and standard user berths in many capital city ports, even though shipping is by far one of the most environmentally friendly forms of transport on a per tonne-kilometre basis.

The amount of freight carried on rail is static or declining in capital city ports.  Upgrading the logistics chain between port and rail, as well as developing better handling facilities at the berth are vitally necessary and overdue.  Investing in ports is the critical means of participating in the region’s wider growth.

The opportunities and challenges are clear.  

To meet this need Australia is leading the world in the way it engages with private sector investment to fulfil major capital works.  The Australian Government has committed over A$50 billion for current and future infrastructure investments for the period 2013–14 to 2019–20 onwards to address the improvements required for Australia to remain competitive. This investment is combined with contributions from government and the private sector.

If the country does not rapidly catch up with the advancements being made by its competitors in the Asia Region, who have already partnered successfully with Chinese investors to create more efficient price points and services, it will lose its market standing in the region.  There is some debate as to whether Australia can close the gap in time to meet the rate of demand in the Asia Region.

In its 2016 report, Infrastructure Australia stated that by 2031, Asia would represent about two-thirds of the world’s middle-class population, creating a massive demand for Australian produce and skills.  If Australia is to take advantage of this growth, it needs to be infrastructure ready.

Partnering to meet the Gap

As an island nation, Australia is dependent on well-functioning seaports and airports to trade with the world.  Its economic competitiveness is closely linked to the quality of its national supply chain infrastructure, its ports, railways, roads and airports.  They connect Australian goods and services to domestic and overseas markets.

The increasingly wealthy and demanding consumers in countries such as Japan, the Republic of Korea, Singapore, Malaysia, Thailand and China want high-quality products, including fresh produce, as quickly and as cheaply as possible.  This offers a great reason for countries such as Chinese and Australia to unite for mutual gain.

It is hoped that in the future a partnering between China and Australia will forge a mutual advantage to meet the service requirements of these new consumers.  Such a collaboration would enable Australia to fund its gap in logistics infrastructure and overhaul these at a pace that would ensure it is ready to take advantage of the stratospheric opportunities that lie ahead in a growing market, while China would benefit from a solid source of investment return.

Darryl Judd
Chief Operating Officer, Logistics Executive Group

In 2015, Darryl was named as one the “Top 50 influential individuals in Asia’ Supply Chain, Manufacturing & Logistics industry” in the prestigious SCM Thought Leader publication by SCM World, recognising him as expert in the linkage of business strategy and supply chain best practices to human capital management. Darryl brings 28 years of executive leadership and consulting experience and is regular contributor on thought leadership across numerous industry publications and is a frequent speaker at international conferences and events on business leadership, strategy & people alignment and talent management. He was instrumental in the creation of Logistics Academy and presently holds an advisory board appointment with industry group LSCMS. In 2014, he was appointed as one of five global experts to IATA’s Global Innovation Award selection board and has held senior executive positions within the airline, air cargo and aircraft leasing industry.

The Supply Chain is Knitting Up a Storm

April 2017
Author: Author: Cassandra Lee, General Manager – North Asia & Greater China, Logistics Executive Group

Take note: next season’s big fashion statement will be “Responsible Innovation”

Supply Chain fashion innovation, aka the science behind the manufacture of garments, first disrupted the fashion industry and then the entire world all those centuries ago and became the catalyst for change that we now know as the industrial revolution.

Today if you were asked to think of “fashion” and “revolution”, you would probably conjure up a Vivienne Westward design or Kim Kardashian’s infamous Paper Magazine cover. This is all thanks to the clever marketing of fashion houses. The more fashion has become a tool of mass manufacturing and market consumption, the more it has tried to persuade us that it actually stands for the opposite: the rarified, exclusive, customized, individualized creations that are tailored to our “specialness”. I’m sure we have all succumbed, to have fallen head over heels with the idealization, the grooming of our inner narcissist by the flattering, fashion ads that promise to bring out our inner James Bond or Audrey Hepburn with the spritz of an eau de perfume (probably manufactured in China under quality controls and chemicals they are not obligated to disclose).

The reality is that the revolution of fashion manufacture has been stifled by the opening of third world markets because there was no longer an impetuous to produce technological efficiencies if money can be as easily saved through the use of “cheap” labor.

Not surprisingly, fashion manufacture started to lag in the innovation stakes… until now.

A constant stream of news articles has forced us to face the fashion folly of our ways. We would still like to believe that those expensive, Italian branded sweaters have been hand-knitted in the rarified air of Milan and not in the same Bangladesh sweatshops that push out product for Kmart, but we can no longer deny what has been tagged in the media as “fashion’s dirty little secret”.

So the fashion bigwigs have worked out that the love affair will soon be over unless they change their ways. That is where those buzz words come in: “Responsible Innovation”. The overused decrier “sustainability” is so yesterday Darling..

In Copenhagen in May this year, over 1,200 fashion, political, and business leaders gathered, from all over the world to address the worrying turn in consumer sentiment towards the industry. The dilemma was how to stem the jaded, popular sentiment without damaging profits? How to acquiesce without sacrificing the bottom line?

The answer was there the whole time of course: technology… and so the wheel comes full circle.

Once again it is predicted that the fashion world will become a major disruptor by using its high profile to revolutionise. Of course the technology was there the whole time but now, due to public pressure, it will be used and we will no doubt be hearing all about it on the catwalks from Paris to New York. H&M have already pushed out their “sustainable,” “Conscious, Exclusive” range. Chanel have even started doing a “Green” collection with “high fashion ecological” materials.

Of course this may all be feel good tokenism… or it may be the beginning of a new way of order, a new way of doing the business, just like the industrial revolution that started in the weaving rooms of England and Scotland of so long ago. Sustainability will be replaced with Innovation as the whole industry is exposed to the technology of an open transparent media who insist on closing the loop and pushing towards change.

This could be yet another new avenue for supply chain professionals to demonstrate their finesse as business leaders and augmenters of change. Supply Chain and Logistics Leaders everywhere, grab your algorithms, your ERPs and dashboards, from Copenhagen to New York and Paris, the revolution is high!

Cassandra Lee
General Manager – North Asia & Greater China, Logistics Executive Group

Based in our Regional Headquarters of Hong Kong, she operates in a global capacity and leads the North Asian Business streams of Consulting, Executive Search and Training and associated teams in the delivery of Talent Management, Education and Talent Acquisition services.

With more than 16 years Industry experience Cassandra has provided senior level executive recruiting and consulting services to organizations around the world, which delivers profitable leadership change to key organisations. Cassandra exemplifies excellence in her innate ability to connect executive talent with businesses across the supply chain.

Cassandra’s proven and highly successful approach melds strategic analysis with aggressive process-driven search execution. She works with companies, not for them. As such, she has become one of the leading executive recruiters in her field today and a thought leader in Talent Management and Learning & Development with a loyal client base and extensive professional network, including supply chain, procurement, retail and business leaders at all levels of business operations globally.

The Grey Invasion

August 2017
Author: Darryl Judd, Chief Operating Officer, Logistics Executive Group

Is an aging population all doom and gloom?

Population change is a hot topic these days for all sorts of reasons. There is a deep fear, as demonstrated in developed countries like Germany and Japan in the 1990’s that our able workforce is shrinking and that the consequence of this will be shrinking productivity and a smaller economy. It is feared that this would result in a poorer lifestyle. According to the United Nations, the key concern we should all be focusing on is aged population growth. Staggeringly, they project that the number of people over the age of 65 is due to double in the next 25 years. That will amount to 1.1 billion people or 13% of the population. If we break that down to a figure closer to home, that will be a ratio of 26 out of every 100 people over the age of 65 by the year 2035.

Of course there will be variances around the globe that will determine fluctuations and variances in this number. Richer, more developed countries will have a higher proportion whilst countries that are still developing will rise at a lower rate as they still have a strong birth rate.

So how is the world meeting this unprecedented development? We thought we would ask our staff across the world how various governments are meeting the challenge.

“In Australia we seem to find that people are living longer but also working longer” said Mr Kim Winter, Global CEO of the Logistics Executive Group. “Our aging population is highly skilled and they have a strong work ethic”. The aging population in Australia is living longer and is expected to increase substantially with the retirement of the Baby Boomers. To counter this effect on GDP, the Australian Government has extended the legal retirement age and made personal wealth and superannuation a factor of eligibility for pension entitlements. They are also trying to ensure that taking measures to ensure that all segments of the population have the ability to skill up and find employment, including women. New immigrants will also offset the loss of younger workers.

“Here in Singapore,” says Carmel Perales, General Manager, South East Asia of Logistics Executive Group Singapore “education is playing a very important role in ensuring older people work longer”.

“It makes sense that older people will find it harder to work longer in more labor intensive, less-skilled jobs”, she added. The Singapore Government have invested in initiatives to encourage older workers to upskill while promoting the value of wisdom and experience to counteract any prejudice about aging.

“There is no doubt that higher-skilled employees have a better quality of life” said Cassandra Lee, General Manager Hong Kong & Greater China “They get paid more and their work is less physically demanding which means that they can stay in the workforce longer”. She added.

Technology is also making it easier for the over 65 workers to stay employed by offering more flexible work place alternatives. For example, the internet and now facilitates working from home rather than the obligatory requirement of commuting to an office. “Technology also means that there is less demand for unskilled labor as a lot of manual labor is now being replaced by machines,” continued Ms. Lee. “In Hong Kong, just like Singapore, there is an emphasis on education and skilling the younger generation so that even if there is a smaller working population, they will have the skills to manage and productivity will not decrease as technology picks up the shortfall of a disappearing workforce”.

Labor saving, capital intensive technology innovations will offset the shortfalls that may be encountered due to a smaller workforce. “In Dubai we have experienced a boom in technology investment” said Mr Kim Winter, Global CEO of the Logistics Executive Group. “It will continue to be fascinating to see how the population will change as the workforce needs change.” He added. “In the Middle East, already there has been a growth in the number of expatriates who are well educated and highly skilled and it is expected that this will continue as Dubai moves from its adjustment phase from development to a highly skilled economy”.

“Overall what this means is that out of necessity there is going to be a global shift in the perception of our older generation” said Mr Winter. As an employee himself who has entered into his silver years, Mr Winter has firsthand experience. “I can attest that being older does not necessarily mean that you want to rush out and buy a set of golf clubs. I lead a more demanding life today than I did when I was much younger”.

There is a slow but growing body of evidence that shows that skilled, aged workers are equally as productive as their younger counterparts. Due to their high degree of skill and experience, their retirement would cause a debilitating loss to the industry, if these older workers were to retire. However, there will have to be changes made at different levels from government policy, company practices and the individual mentality so that an older workforce can be supported and encouraged to flourish.

Government policy level
As detailed above, policies will need to be put in place that encourage older people to stay in the workforce. This will include upskilling, changing perceptions and countering age discrimination, changing pension age and restructuring taxation to encourage older workers to remain in employment on some level.

Company level
To counter this a lot of companies are setting up mentoring systems that allow prospective retirees to train their replacements. At Bosch for example, older workers are asked to sit down for a formal interview so that their younger successors can ask them questions and capture their advice and experience before they retire. “There is so much that an older, wiser head can offer in terms of mentoring in the area of leadership” said Mr Winter who is also the group leader in Logistics Executive Group’s Coaching Consultancy.

Personal level
Older workers have to be able to be more flexible than ever before. They need to be prepared to take leadership from younger, less experienced managers. They need to be prepared to change careers, to upskill and to work under different conditions of employment in terms of pay and hours.

So what does this mean for the logistics and supply chain industry? There has been a barrage of information in the recruitment space written about the “skill shortage” but not very much on how the industry is going to meet the challenge of an aging workforce. Perhaps age has not been a very sexy topic in the past and as a result the logistics and supply chain industry is critically lagging behind in how to address this growing issue.

Ironically it will probably be the older generation itself that will lead and develop this change. Make way for offices filled with grey bearded hipsters boasting the latest smart gadgets. After all, for several decades, women’s magazines have purported that “30 was once the new 20” and then that crept up to 40 and so on. We are all living longer, aging better, earning more and are better educated with a greater spending power that will have more influence. Make way for the grey tsunami!

Darryl Judd
Chief Operating Officer, Logistics Executive Group

In 2015, Darryl was named as one the “Top 50 influential individuals in Asia’ Supply Chain, Manufacturing & Logistics industry” in the prestigious SCM Thought Leader publication by SCM World, recognising him as expert in the linkage of business strategy and supply chain best practices to human capital management. Darryl brings 28 years of executive leadership and consulting experience and is regular contributor on thought leadership across numerous industry publications and is a frequent speaker at international conferences and events on business leadership, strategy & people alignment and talent management. He was instrumental in the creation of Logistics Academy and presently holds an advisory board appointment with industry group LSCMS. In 2014, he was appointed as one of five global experts to IATA’s Global Innovation Award selection board and has held senior executive positions within the airline, air cargo and aircraft leasing industry.

It’s widely known the GCC region is about to embark on a structured change to it’s fundamental taxation model with the introduction of VAT (Value Added Tax) from 1st January 2018. Driven by dealing oil revenues and the need to diversify economic activities, governments throughout the GCC are fully committed to the introduction of VAT to ensure they are in the position to balance the books. Yet businesses throughout the GCC and those trading across the region are struggling to understand just what the introduction of VAT is likely to mean to their operations, although committed to its introduction and having announced the framework, the inherent lack to detail and the nearing deadline of its introduction means for many businesses confusion is riped amongst their finance professionals.

The UAE government has recently started as communication program consisting of seminars and forums, the latest of which was held last 3rd week in Dubai with the aimed to answer many of the questions facing businesses, the Ministry of Finance is working diligently to ensure that there is no disruption to their intended commencement.

So what does VAT mean? And where do we stand today with what we do know about the framework and regulations.

The UAE Ministry of Finance hosted several sessions related to VAT upcoming regime in GCC. The session aimed to send clear message to market about VAT go-live and the preparation needed for each tax person.

• Farmers and fishermen are exempted from VAT.
• FTA to issue guidelines on repayment/ refund of tax.
• Tax refund for tourist, provisions is still being work out.
• Tax refund for international organizations (i.e. diplomatic missions).
• VAT on CAPEX is immediately deductible.
• FOREX is not taxable.
• Processing fee for remittance is taxable.

1. Sequential no.
2. Date of invoice
3. Name, address and Tax registered number
4. VAT invoices should be kept for 5 yrs.
5. VAT returns should be printed and hard copies to be filed properly for FTA checking purposes.

Entities with VAT Group will be treated as one entity.

• VAT is applicable to ALL intercompany transactions.
• VAT is applicable to subsidiaries
• VAT groups will allow different companies to form one group to obtain one (1) registered number.

FTA will check if all companies is controlled (at least 51% owned) by one person.

FTA to conduct selection base audit (risk base).

FTA does not require companies to have external auditors.

FTA will call the companies to audit ( 5 days before the on-site audit) to allow preparation of documents.

FTA might conduct surprise visits/audit if there is illegal activity being informed.

Meryjhel Casinas
Senior Consultant – MENA, Logistics Executive Group

Meryjhel is a highly-experienced finance professional with a Bachelor of Science in Accountancy and Certificate from CIMA-UK. Meryjhel has over 13 years of experience in financial accounting reporting, business analysis, budgeting and project management. She is a subject matter expert on accounting in courier, logistics and freight forwarding. Meryjhel has worked with government and consulting previously with Accenture. In addition, Meryjhel lead finance functions for one of the world’s largest logistics companies, FedEx Corporation with stints in the United Arab Emirates, Kenya and Afghanistan. She gained mastery of skills to manage finance functions, strategy development and leadership on her experienced in Middle East, Africa and Asian markets.

2017 Total Logistics Report Released

February 2017
Author: Kim Winter, Chief Executive Officer, Logistics Executive Group

Logistics Executive Group announces the release of the Total Logistics 2017 Report, by partner Transport Intelligence (Ti).

The Report examines the dynamics of each logistics segment. Key elements of the report including some highlights by David Buckby, Economist at Ti, including the following:

• The logistics industry has undergone a transformation in terms of the major logistics service providers which have come to dominate the market.
• Ti’s new report examines the dynamics of each logistics segment that have caused the industry to transform.
• For the first time, this report includes Ti’s unique total logistics market sizing, segmentation by logistics market from top to bottom, and forecast growth to 2020.
• Major developments, such as the ‘Internet of Things’, ‘autonomous vehicles’ and ‘3D printing’ are all assessed in detail.

This report offers a concise, easy to understand view of the industry. In addition, for the first time, Ti has sized the total logistics market and is offering a breakdown of the industry by logistics market, as well as forecasts to 2020.

Ti’s CEO, Professor John Manners-Bell explained, “The global logistics industry is vast, both in terms of market size and the huge numbers of people employed in the sector. It is therefore surprising that its role in the development of the global economy is generally overlooked.”

According to Manners-Bell, “Without the inexpensive and reliable transport of freight, manufacturers would not be able to tap into the cheap labour resources based in remote locations throughout the world. Nor would retailers be able to provide ever-increasing levels of service to their customers, ensuring shelves are always stocked whilst inventory is kept to a minimum”.

This report examines all the pressures which have led to the emergence of today’s vibrant global logistics industry – from both the ‘demand’ (i.e. manufacturing and retailing) and the ‘supply’ (i.e. logistics provider) side perspective. In addition to the roles of the contract logistics and freight forwarding sectors, it also examines the dynamics of the express parcels, container shipping, air cargo, road freight and intermodal industries.

Whilst global macro-trends are highly important to the long term future of these sectors, conversely it is the structure and competitive nature of these sectors which has a ‘bottom up’ influence on supply chain management and hence global economies. For example, hyper-fragmentation and price competition in the European road freight industry has been a key input into the formulation of manufacturers’ and retailers’ centralised distribution strategies.

Manners-Bell continued, “What is clear is that after a turbulent period of transformation, there is no sign that change in the logistics industry is slowing down. A powerful mix of demand and supply side factors means that further re-structuring is possible, if not probable.”

A key statistics from the report is that global economic growth in 2016 was just 2.3% according to World Bank.

What’s the outlook for logistics?
2016 has been the weakest year for the global economy since the Great Recession of 2008-09. That is the clear and simple message of the World Bank’s most recent Global Economic Prospects report. Global economic growth was just 2.3% in 2016, down from 2.7% in 2015. Weak US performance and recessions in large commodity-dependent economies curtailed growth. In emerging markets, the disparity between growth of commodity exporting nations compared to importing nations was vast:

The struggles of commodity exporters’ overall economic growth are thought to have spilled over and negatively affected their logistics sectors. This is apparent in the findings of the forthcoming Agility Emerging Markets Logistics Index 2017 report, due to be released later this month, which features a composite index that ranks emerging markets based on their logistic industry prospects. Index scores and rankings of several major commodity exporters have suffered while importers have been far more resilient.*

Looking ahead, some of the World Bank’s key expectations for 2017 are:

• Global growth is projected to rise from 2.3% in 2016 to 2.7% in 2017. However there is substantial uncertainly around this baseline figure. The World Bank asserts there is a 50% chance that actual growth will be between 2.0% and 3.2%.
• Political uncertainty (largely associated with Brexit and Donald Trump) has been identified as a key risk which could curtail growth in 2017.
• On the other hand, possible fiscal stimulus, especially in the US, represents a substantial upside risk to the outlook.
• Rising oil prices are expected to help boost three leading commodity exporters – Brazil, Russia and Nigeria – from recession in 2017. However metals and agriculture commodity prices overall are expected to remain more or less flat to 2019.
• World trade volume growth was just 2.5% in 2016. It is expected to increase to 3.6% in 2017. Although new trade restrictions reached a post-crisis high in 2016, encouragingly, most emerging markets “still have a large untapped potential to move up the value chain, by shifting to more complex and higher domestic value-added products”.

Main take-outs regarding the logistics industry are first, that unsurprisingly, the expectation of slightly higher economic growth in 2017 is good news, but don’t count in any way on the global economy to deliver a more favourable environment in 2017 than in 2016, as more uncertainty surrounds these forecasts than in previous years.

Ditto for world trade growth. And finally, it is quite possible that growth in global ‘supply chain complexity’ has slowed down significantly over the last five years or so – not good news for logistics providers, especially forwarders.

The Report outlines Consolidation & Fragmentation across the Logistics Industry as outlined in the below diagram.

Although growth in supply chain complexity encompasses all manner of considerations, one possible proxy for it is growth in global value chains. Global value chains measure the extent to which production processes are fragmented across countries – the iPhone contains parts from at least 10 different countries. It seems that growth in fragmentation of production has slowed significantly since 2010, and it does not appear that it will pick up to rates seen in years past. The Report also provides an excellent insight into global Exports trends.

*Many of the forward-looking issues that the World Bank’s Global Economic Prospects report addresses are also questions that have been asked of over 800 supply chain and logistics executives in the upcoming Agility Emerging Markets Logistics Index 2017 survey. For example: How will economic growth in emerging markets fare in 2017? What do you think will be the most significant drivers of the global economy in 2017? How concerned are you about growing protectionism and moves away from free trade?

For the logistics industry’s take on global economic prospects and to purchase a copy of the Full Report, follow this link.

Ti has also released 2017 Global e-commerce Logistics report

The report includes an exploration into how e-commerce trends are disrupting ‘traditional’ e-commerce logistics as rapid growth sees businesses searching for a comfort zone that they may never find and logistical challenges still need to be overcome in last-mile and fulfilment operations.

The report offers readers valuable insight into the development and prospects of this market. A key theme examined throughout highlights e-commerce itself as the disrupter to ‘traditional’ e-commerce logistics. Presented from multiple angles (global and regional, fulfilment and last-mile, and from retailers and LSPs) the report offers comprehensive analysis on e-commerce logistics trends which could provoke further developments and innovations within the industry.

To Purchase a copy of the 2017 Global e-commerce Logistics Full Report, follow this link.

Kim Winter
Chief Executive Officer, Logistics Executive Group

The founder of Logistics Executive Group, Kim possesses 35 years of executive leadership experience spanning Executive Search & Recruitment, Corporate Advisory, Trade Facilitation, Executive Coaching & Leadership Development, across Supply Chain, Aviation, Maritime, E-Commerce , F&B, Logistics, FMCG and Retail.

A professional public speaker and event MC and regular contributor to industry media, Kim is a Director of companies in Australia, Asia, India, and the Middle East and is the Founder of Australian registered charity Oasis Africa Australia www.oasisafrica.org.au providing freedom from poverty through education to over 8000 orphaned children in Kenya’s slums since 2006.

Man versus Machine

March 2017
Author: Darryl Judd, Chief Operating Officer, Logistics Executive Group

The biggest transformation since Henry Ford’s Model T

According to an Oxford University study in 2013, it was predicted that automation would replace half the workforce in the US alone in the next two decades. The big concern for many today is that the accelerated adoption of automation in the logistics industry will destroy jobs, as technology replaces humans.

This fear is understandable. Transurban’s Scott Charlton at the AFR Business Summit, declared that this is only the beginning of a major transformation. New technologies are merging rapidly in all sorts of new ways. “Everyone knows about electronic and autonomous vehicles. But we’ve got intelligent transport systems, Mobile-as-a-Service, and other technologies that are combining now in different ways to fundamentally change transport”. Charlton describes this as the biggest transformation of the transport sector since Henry Ford’s Model T and there is more to come.

Here are a few figures that highlight how staggering this change is:

1. The robot invasion
Populist governments globally are exalting protectionist policies to save jobs. However, there is no stopping the robots. The use of robotics will increase in the logistics industry by 15x in the next 4 years, according to a new report by Tractica. It is estimated that this will initiate a staggering extra US$4.44b in investment by 2022. According to the report, titled “Warehousing and Logistics Robots,” there were an estimated 40,000 robotic units shipped worldwide in 2016 but by 2021, there will be 620,000. They predict robotic shipments to reach $22.4 billion by the end of 2021, up from an estimated $1.9 billion in 2016.

Companies like Amazon and Google are competing to invent advanced warehouse technology. Ford is also experimenting with co-bots (collaborative robots) in a factory in Germany. Magazino has “seeing” robots with advanced computer vision, that can select items off a shelf, pick them up, and bring them into a sorting machine—which is arguably a big advantage when it comes to smaller “picking” tasks that often require a human worker. It’s also a benefit when it comes to a missing barcode or improperly placed item on a shelf.

2. Rise of the Internet of Things (IoT)
The Global Internet of Things (IoT) market reached USD 598.2 Billion in 2015 and the market is expected to reach USD 724.2 Billion by 2023. Further, the market is projected to register a CAGR of 13.2% during the forecast period 2016-2023 globally, according to Researchnester. In another report, Forrester found that 58% to 77% of surveyed organizations consider locating objects, containers, and personnel as the top fundamental functions of IoT solutions. If we just look at the retail industry alone, Juniper Research forecasts that by 2020, retailers worldwide will spend $2.5B on IoT-related hardware alone, including beacons, RFID tags, sensors, and their installation costs. This investment represents a nearly fourfold increase from 2015.

3. E-commerce and Omni-Channel Solutions
The growth of E-commerce can be seen in real numbers. According to a recent report by DHL the cross-border, e-commerce market accounted for USD 300 billion Gross Merchandise Value (GMV) in 2015. It is expected to grow at a rate of about 25% p.a. by 2020. This represents unrivalled growth on a global scale with 20% of cross-border purchases worth over USD 200.

If we consider China alone, according to the State Council of the People’s Republic of China, in 2016 the country became the largest retail e-market in the world with a value of sales of US$4.886 trillion, compared to US$4.823 trillion in the US. This growth will continue as it is estimated by Alibaba and Accenture that the retail e-commerce market to overseas consumers will reach $994 Billion by 2020.

The biggest transformation in the workplace since Henry Ford’s Model T
This transformation has been painful for many, particularly the low-skilled. However rather than a threat, the addition of automation will likely yield new jobs and opportunities for businesses as they make processes faster, safer and more efficient. As a result, the logistics market will actually grow and its workforce along with it.

Culture of adaptors
To be successful throughout this upheaval, leaders need to bring their people along with them. They need to inspire, to be the front-runners that set precedents, control and at the same time, unleash imagination. Employees need to upskill and demonstrate geographical flexibility. To have the mental stamina to embrace the endless flux that new waves of technologies will bring and jettison fear of the new. The logistics industry of the future will employ highly skilled professionals in positions that do not exist today. Their willingness and ability to acclimatise and assimilate new technology are critical.

Widening skill gap
The annual Logistics Executive Employee Survey consistently highlights the importance of leadership in inspiring and retaining. No doubt, as technology impinges more and more on day to day norms, this will become more critical. To be successful, an investment in technology needs to be equalised with an adequate investment in workforce attraction, training, and development.

To stay competitive, leaders must empower and delegate more. For example, at Amazon, Bezos offers his employees 95% prepaid tuition at fulfillment centers in in-demand fields. This encourages them to “be owners from day one,” according to Teal Pennebaker, Corporate Communications Manager. By determining their own study choices in this way, Amazon is also allowing staff to take ownership and “pioneer” their own careers.

The new head of Microsoft, Satya Nadella, who has been praised for turning around his company in the last 3 years, agrees that he has had to “listen” more. As opposed to Bill Gates, he encourages open collaboration, similar to Amazon’s empowering training plans. This offers employees the confidence to take risks and exchange ideas.

The bottom line is that automation can actually enhance the logistics workforce, as long as people are brought along on the journey through good leadership. The adage coined by Doug Conant, President, and CEO of the Campbell Soup Company many years ago, that “to win in the marketplace you must first win in the workplace, ” rings truer than ever in today’s age of disruption.

Darryl Judd
Chief Operating Officer, Logistics Executive Group

In 2015, Darryl was named as one the “Top 50 influential individuals in Asia’ Supply Chain, Manufacturing & Logistics industry” in the prestigious SCM Thought Leader publication by SCM World, recognising him as expert in the linkage of business strategy and supply chain best practices to human capital management. Darryl brings 28 years of executive leadership and consulting experience and is regular contributor on thought leadership across numerous industry publications and is a frequent speaker at international conferences and events on business leadership, strategy & people alignment and talent management. He was instrumental in the creation of Logistics Academy and presently holds an advisory board appointment with industry group LSCMS. In 2014, he was appointed as one of five global experts to IATA’s Global Innovation Award selection board and has held senior executive positions within the airline, air cargo and aircraft leasing industry.

The Asian E-commerce Frenzy

November 2016
Author: Darryl Judd, Chief Operating Officer, Logistics Executive Group

The Logistics industry is poised for growth as Asia supersedes the USA to become the largest online retail market in the world.

“There is no doubt that Asia will set the agenda for ecommerce in the next five years. Its trajectory has been wild and its not set to slow down anytime soon. In fact, it will grow by the equal size to the largest market outside of Asia and most mature e-commerce market in the world – the USA”. Said Darryl Judd, COO of Logistics Executive Group, a specialist supply chain advisory firm.

There is a plethora of recent statistical evidence to support this. The Asian middle class is projected to expand to over 1.7 billion people, and China, India and Indonesia will be the top 3 countries of e-commerce growth in the next 2 – 3 years [1]. In fact, China is expected to exceed $1 trillion in e-commerce transactions, accounting for more than 40% of total worldwide e-commerce transactions by 2018 [2]. According to the recently released Bain-Google report, online retail sales across South-East Asia could hit US$70bil (RM283.5bil) by 2020. While this does not yet match the pace of China, now a more than US$500bil (RM2,025bil) market – multinational retailers are finding it harder to ignore the region’s emerging influence.

B2C E-Commerce sales in Asia are projected to increase by double-digit rates through 2019, with India and countries in Southeast Asia especially. In 2014, Indian companies, including Flipkart and Snapdeal, and Chinese platforms like Meituan and Dianping accounted for nine out of the top ten E-Commerce investment deals in the region.

“This is having a profoundly innovative and expansive impact on the logistics industry” continued Darryl Judd. “The e-commerce sector’s very existence is contingent on the underpinning of a solid and sophisticated logistics function. In fact, it could be said that e-commerce businesses are really sophisticated logistics businesses in disguise” he went on to add.

Once again, there is a vast amount of research coming out of Asia to support this. For example, we can expect 1.1 trillion more parcel deliveries per year due to current e-retailing sales (as a percentage of all retail sales) at current average order values and parcel sizes. This converts to an estimated 350 million more pallets a year between now and 2020! “It will most likely be much more than this, as e-retailing continues to grow” commented Darryl Judd.

Along with an increase in consumer markets, other factors for growth include increased internet penetration, strengthening trust in online payments, development of delivery infrastructure and E-Commerce regulations, which will all boost B2C E-Commerce growth.

According to Business Wire, (March 22, 2016) other countries earmarked for growth include Thailand, Vietnam and the Philippines, which currently account for less than a 1% share of domestic retail sales.

Some of the major regional players in the E-Commerce space in Asia include online retailer and marketplace Lazada, online classifieds platform OLX and online clothing merchant Zalora. Also global E-Commerce websites such as Amazon.com, Aliexpress.com and eBay.com rank high in popularity among Internet users in Asian countries. “An example of how these online retailers have transferred themselves into high powered logistics providers is evident if we take Amazon as an example” said Darryl Judd.

“Amazon has evolved through several stages of its life. The company started its life as an ecommerce company, it then transformed into a full technology provider offering a platform for others, and most recently it has evolved into a freight company in its own right. This gives them a license to wholesale sea freight to others.” He went on to add “They have just also just agreed to lease up to 60 B767-freights just for domestic within the USA, meaning they now compete directly with UPS, DHL and Fedex who previously provided Amazon with aircraft. 60 planes is a lot and a big investment! Exclaimed Darryl.

“Whilst they say they need extra capacity and assurance of service during peak periods, how long will it be before they compete directly with the other express companies? They already in many places operate their own delivery vehicles (Amazon Prime)” he concluded.

Other characteristics shaping the e-commerce, Asia expansion include the use of smartphones and the increase in population due to urbanisation.

Indonesia and China have a higher rate of mobile phone usage per person than “old-fashioned” internet usage from a PC or laptop. The volume of mobile traffic generated by smartphones is now twice that of pc’s, tablets and routers and is predicted to grow ten-fold by 2019.

Urbanisation in Asia will continue to produce a higher population with more concentrated, consumer markets. The number of savvy technology users will also grow as the number of Generations X, Y and Millennials increase. The net impact will result in an increase in demand for e-commerce services.

What do these developments in technology and urbanisation mean for the logistics industry? “We are going to need a far bigger and more resilient logistics and warehouse network that is far more integrated across urban areas and cities to support this vast increase in urban online demand” said Darryl Judd.

An innovative solution that has already emerged as a response to growing consumer is the proliferation of e-fulfilment DC’s on the outskirts of urban areas. This includes smaller urban facilities within urban community catchment areas and a variety of collection options. They have been mainly set up to support swift response times, especially with the advent of same day delivery.

There have been growing innovations in Last Mile Delivery in Asia, based on this growing consumer expectation. “Click and Collect” innovations and urban lockers are becoming an increasing part of some consumers daily lives with many variations taking place which are customised to the consumption needs of different cities and countries.

The adoption of smart lockers, for example is a growing trend in Asia to solve the last mile problem for cities with large and diverse populations. In Beijing the “parcel cube” services have taken off in business districts, universities and urban centres. It allows users to pick up and store their products from cabinets. These smart lockers automatically generate a unique collection code, which is texted to the intended recipient who can then collect the parcel anytime.

Smart Urban Warehouses are also growing. They are becoming an integral part of the last-mile delivery with new smaller facilities to support key urban locations.

The one important takeaway is that the advent of e-commerce cannot be ignored. “Whilst this will mean new complexities and increased investment, the potential rewards are huge.” concluded Darryl Judd. “Our consulting company has seen clients looking to embrace these opportunities with an increase in assignments aimed at new freight and warehouse setups geared at providing new e-commerce, logistics services”.

There is no doubt that the logistics industry, as partner to e-commerce, is going through a unique period of transformation. This transcends sectors and is resulting in a huge step forward in innovation and customized, client experiences and a very exciting time to be in the industry!

[1] (2014, December). The New Age of the Asia Pacific Retail Market

[2] (2014, December 23). Retail sales worldwide will top $22 trillion this year.

Darryl Judd
Chief Operating Officer, Logistics Executive Group

In 2015, Darryl was named as one the “Top 50 influential individuals in Asia’ Supply Chain, Manufacturing & Logistics industry” in the prestigious SCM Thought Leader publication by SCM World, recognising him as expert in the linkage of business strategy and supply chain best practices to human capital management. Darryl brings 28 years of executive leadership and consulting experience and is regular contributor on thought leadership across numerous industry publications and is a frequent speaker at international conferences and events on business leadership, strategy & people alignment and talent management. He was instrumental in the creation of Logistics Academy and presently holds an advisory board appointment with industry group LSCMS. In 2014, he was appointed as one of five global experts to IATA’s Global Innovation Award selection board and has held senior executive positions within the airline, air cargo and aircraft leasing industry.

One Road, One Belt impact in Asia and Europe

September 2016
Author: Darryl Judd, Chief Operating Officer, Logistics Executive Group

• Potential Impact and what does this mean
• How to prepare for this and explore the benefits

There has been so much hype about the One Road, One Belt (OBOR) project. It has been compared to the Marshall Plan however, it is over 12 times this. Superlatives have been flowing since it was first announced by Xi Jinping in 2013. It has been hyped as the Fourth Industrial Revolution.

In China alone apparently over one million documents have been published about it, according to Theresa Fallon’s article “Xi Jinping’s Belt & Road Initiative: How to Win Friends & Influence Europeans”. Xi Jinping has positioned it as the third phase of China’s reform from which it will emerge as a regional leader in international trade that coincides with the emergence of new Chinese led multilateral financial institutions.

As the names suggest, it will connect China via land and sea with the rest of the world. The belt mainly follows the historic Silk Road through Central Asia, West Asia, the Middle East and Europe Southeast Asia, Oceania and Africa.

The Maritime Silk Road will continue through Southeast Asia, Oceania and North Africa and includes the highly contiguous South China Sea. China also plans to connect inland cities to the Indian Ocean to seaports on the east coast, including the transport of oil from Iran and Iraq directly to China by rail which will affect trade through the Malacca Strait.

Investment scope:
The Chinese Government has estimated the cost of this enterprise to be in the staggering realm of US$8 trillion. They emphasise that investment will need to be market-based, were “markets decide on the most efficient allocation of resources” according to Financial Secretary JohnTsang Chun-wah and financing underwritten on international standards. China’s Silk Road Fund of USD 40 billion will finance infrastructure projects linked to OBOR, according to the European Institute of Foreign Studies.

Many countries in the Belt have rushed to join the China-led Asian Infrastructure Bank (AIIB) which some suggest is China’s answer to the American Trans-Pacific Partnership and The Transatlantic Trade and Investment Partnership. The AIIB is dedicated to lending for infrastructure projects with an authorised capital of $100 billion, 75% of which will come from Asian and Oceanian countries.

Implications

Political:
The Chinese government has officially promoted it as a means of creating cohesion through inter-governmental cooperation on a macro level and be underpinned by the development of soft infrastructure in areas such as trade, investment, and customs cooperation. The aim of “financial integration” through joint efforts AIIB and BRICS (Brazil, Russia, India and China) signing of MOUs in bilateral financial regulation is to establish efficient regulatory control mechanisms.

However, there have been mutterings of an underlying geopolitical push behind OBOR. Russia, in particular, has raised concerned about the influence China will have over Central Asia. India and other countries have expressed security concerns in the Indian Ocean Region including the issues in the South China Sea and President Obama’s Asian Pivot Policy are all matters of delicate consideration.

Economic:
“How many world-class airports does a country need?”

“By 2020, China might well have the best infrastructure in the world. What then—should we tear down some structures to rebuild them?”

These were the questions asked by Mr Shen, Professor at Fudan University.

The intention of OBOR was, according to some analysts, to find new markets for China’s growing excess capacity of products like steel and construction materials. For example, the Chinese Railway Group is building a high-speed train from Belgrade to Budapest on the proviso that Chinese construction materials are used.

Alternative thinking is that it will provide a long needed stimulus for Asia that will relaunch global economic growth. It will address the “infrastructure gap” paradox that even though the world is flush with savers’ money, infrastructure cannot attract private investors because they do not trust governments to regulate their deals.

Internally China will be able to move its industrial and manufacturing to other parts of Asia and by doing so address domestic pollution and environmental damage. This trend is already occurring in China in any case due to rising labor costs.

Assessing the Risk

Financial:
There has been a concerning trend for OBOR funding to come not from commercial banks or multilateral institutions like the AIIB as originally planned but from Chinese bilateral policy banks like China Development Bank and Exim Bank, which are known for their risk appetite. Domestically Chinese banks have always been protected so it will be interesting to see how they manage in the international market.

Many underdeveloped countries require so much initial investment to get up to a standard that it is hard to see how this could return a profit and not be seen as aid. Chinese officials insist that OBOR is not a costly geopolitical project offering charitable government aid projects but strictly based on commercial terms. However, in countries like Pakistan financial losses have been reported and Venezuela a write-down on loans.

Political:
There have been delays in some parts of the OBOR due to political and economic instability in regions such as the Middle East. Local business investments need government support in policies, and investment protection to facilitate continued grow. Some of China’s partners pose economic, political and social risks. These factors could induce economic uncertainties which China needs to safeguard against in order to ensure their investments are sound.
There is also a worrying truth in the expression: “strategic economic benefits often coincide uncomfortably beside strategically defensive benefits”. China’s expansionist ambitions are feared by countries which have remained cautious in their approach to negotiations based on the impact of the conflict in the South China Sea. These countries are asking for more depth and detail as reassurance that their intentions are not expansionist which makes for a slower process.

Seizing the Opportunity
‘It does not matter if it’s China or someone else, it has to happen,’ said Ronnie Chan, the Chairperson of property developer Hang Lung.
Chan pointed out that there is burning demand for infrastructure throughout the developing world that needs to be addressed for economies to continue to grow.

The rationale may be global connectivity but from a business standpoint, there are clear opportunities at a time of rapid accent of the renminbi, including currency swaps, trade financing deals, and offshore bond issuance. OBOR will encourage Chinese firms to invest outwards, and RMB internationalisation will play a significant role in this process.

The International Monetary Fund statistics confirm that by 2020, countries along the land and maritime belts will account for 50% of global GDP and generate opportunities for both China and its increasingly international corporations.

Government agencies in advanced economies are promoting OBOR as an investment to be seized with both hands. These agencies prove an excellent starting point for companies who are interested in finding out more about how they can benefit from the opportunities presented by OBOR.
OBOR holds tremendous export potential for products technologies and services to enter the country. Even though the Chinese economy has slowed, optimism remains high. China aims to double its 2010 income levels by 2020 as the country moves from exports to services and increases in domestic consumption, from manufacturing to innovation and technology focus. The Chinese domestic consumer market is growing, both through e-commerce and retail and is projected to become the largest in the world, opening up an enormous new customer base that has a taste for luxury goods. Aside from the construction industry benefiting from infrastructure investment, there will be additional opportunities created through OBOR initiatives in other industries such as e-commerce, logistics, finance and education.

In the short-term, foreign investors who have already substantially invested in developing integrated supply chains in China will be able to find new uses for their services, rather than relocating elsewhere. For example, Alstom, the French power equipment giant, that rebuilt a turbine factory near Beijing now plans to supply its Chinese hydropower partners as they bid for dam contracts in third countries.

Long term, however, there are substantial gains to be made through collaborations. Chinese companies have the money but multinationals offer technology, experience and good local relationships. Partnerships with members of the host country can ease challenges such as different standards, cultures, financial and legal frameworks.

This knowledge transfer is central to China’s plan to transition to a higher value-added economy. Pfizer, for example, has committed to staging their global R&D operations in Shanghai, despite concerns about IP protection in China. They will open up their R&D processes, and in return the collaboration will offer them access to the large domestic market which will expand as healthcare reform takes shape, as well as good tax incentives.

In weighing up the risks and benefits, whether it meets all its promises remains to be seen, but OBOR cannot be ignored. Local businesses can get on the front foot by keeping an open mind and being up to date on how their particular industry can partner with Chinese counterparts to seek out and exploit opportunities the OBOR will offer for years to come. Whatever the case, it is well and truly happening, so entrepreneurs belt up if you want to take advantage of the opportunities!

Darryl Judd
Chief Operating Officer, Logistics Executive Group

In 2015, Darryl was named as one the “Top 50 influential individuals in Asia’ Supply Chain, Manufacturing & Logistics industry” in the prestigious SCM Thought Leader publication by SCM World, recognising him as expert in the linkage of business strategy and supply chain best practices to human capital management. Darryl brings 28 years of executive leadership and consulting experience and is regular contributor on thought leadership across numerous industry publications and is a frequent speaker at international conferences and events on business leadership, strategy & people alignment and talent management. He was instrumental in the creation of Logistics Academy and presently holds an advisory board appointment with industry group LSCMS. In 2014, he was appointed as one of five global experts to IATA’s Global Innovation Award selection board and has held senior executive positions within the airline, air cargo and aircraft leasing industry.

Navigating Talent Challenges in North Asia

October 2016
Author: Cassandra Lee, General Manager – North Asia & Greater China, Logistics Executive Group

Successfully navigating talent challenges across North Asia – A topic spoken about in Seminars and Conferences repeatedly across the region, yet a subject that so many fail to truly comprehend let alone excel at.

Lets break down some of the key elements of North Asian Talent Challenges and gain insight as to how one of the Worlds largest Express logistics providers has risen to the challenge and delivered returns.

Full Employment

Hong Kong is suffering this challenge currently with unemployment at circa 3.5% nationally. This present numerous challenges, one of which is salary pressure and this heavily impacts a vast array of business at an operational level for any front line staff.

Across the supply chain, if there is not front line staff processing orders, providing customer service, loading planes and trucks and delivering goods there is a phenomenal negative impact on the economy.

Whilst skilled workers demand higher salaries and customers demand lower prices, how does an organisation fill these roles and keep the equilibrium balanced? Ms. Donna Kong, VP, Human Resources, DHL Express, Hong Kong who well knows this challenge shares that whilst “finding people with the right skillset is no doubt important, but even more so is finding those with the four key attributes of speed, a can-do attitude, passion and getting-it-right first time”. Very simple solution, right? However, putting that into action and driving alignment across an organisation strategically to embrace applying a pragmatic approach is not always easy, and takes a true business partnering HR approach and a commitment to training and development – more on that later, – but if an organisation as large as DHL Express can align and hire with a focus on attitude – there is no excuse for anyone else.

At Logistics Executive, we know that seeking talent that is motivated to execute the task at hand is fundamental to achieving the desired outcome. This principle applies to talents at all levels of spectrum and extensive, tangible evidence of the application of this fundamental has been the passion of my personal guru of Talent – Mr. Lou Adler. (Side note – If you have never heard of Lou Adler, you simply must do yourself, your team and your organisation a favour and immerse yourself. I was fortunate to start reading his material over 15 years ago and have had the gift of his personal training.)

Equality in the Workplace

Traditionally, some roles across the supply chain have been largely dominated by one gender vs. the other. It’s exciting to see the role of women becoming so prominent and very highly represented across most functions of the supply chain and very heavily in particular countries. However, some more culturally traditional markets have required a little more education and support to achieve this.

Mr. Akira Endo, VP, Human Resources, DHL Express, Japan, shares how they have taken a balanced performance and capability oriented view on talent through initiatives such as ’Women in Leadership’, which is a volunteer based group of men and women in DHL Express Japan assisted by HR, to help increase the share of women in leadership positions. This program has been so successful in starting to break down the barriers that DHL’s customers now look to them to share their program to drive a wave of change across Japan.

This is further reinforced by DHL’s global initiatives such as the Employee of the Year recognition program, which is celebrated at a regional and local level.

Talent Retention

Probably the biggest issue most organisations have had to face and many continue to struggle with. During the peak of China’s growth, I repeatedly challenged some organisations that double-digit staff turnover is not and never should be acceptable under any circumstances. Whilst many clients heeded our advice and focused on realigning expectations, hiring programs, leadership capability and made sensible and sustainable investments to develop their teams – there were some in the industry that found them on the mouse wheel of constant hiring.

No matter whether the economy is in a boom or bust mode, you simply must be training and developing your talent. Failure to do this will be at an organisation’s own peril and honestly it will likely result in spending more money on hiring practices than what your training investment would be and has significantly less yield from our experience. There is a vast array of training initiatives available in the Industry and Logistics Executive has proudly been awarded as the sole global education partner to CSCMP, the American Council of Supply Chain Management Professional, a pre-eminent industry body with effective online quick courses and supply chain management essential programs to deliver accredited training outside of the US. Training that is on line, affordable and effective to support organisations to retain and develop their teams.

From an organisation perspective, DHL Express is a shining example of consistency in training and development and reaps the rewards of high talent retention. Known in the Logistics Industry as a leader with in-house training programs, DHL has elevated training standards to a new level with the award winning Certified International Specialist (CIS) program. The program provides world class comprehensive training on the fundamentals of international shipping, company strategy and culture to all employees, with managers being accredited as trainers to lead and facilitate a successive series of internal training. Mr. Akira Endo shares that “the program has been a great success and resonates with employees who see management take the time to invest in the staff. The managers are trained to pass on knowledge to the staff and are well placed to answer questions in the context of the business. And the end result shows that both the yield is higher and employee satisfaction is greater.”

In Hong Kong, Ms. Donna Kong also shares her insight on the CIS training program. Within DHL Express, this program has been rolled out to over 100,000 employees globally including the entire Hong Kong team which has seen “enhanced engagement and service levels across the board” according to Ms. Kong.

Its no surprise that with consistent execution of local and regional initiatives that the HR teams in DHL Express Japan and Hong Kong have been driving that both countries have been awarded the “Best Companies to Work For” accolade by the Great Place to Work Institute.

With evidence such as this, the critical pillar to the ongoing success of both countries is their consistency in driving initiatives that support the ongoing training and development of their teams. It is a path that requires a holistic and strategic approach, yet one which clearly brings great rewards to the employees, the organisation and its customers and is a shining example of effective application for the Logistics Industry.

Special thanks to the contributors in this article:

• Ms. Donna Kong – VP, Human Resources, DHL Express, Hong Kong
• Mr. Akira Endo – VP, Human Resources, DHL Express, Japan

Click here to download a copy of the North Asia Salary Trends Report

Cassandra Lee
General Manager – North Asia & Greater China, Logistics Executive Group

Based in our Regional Headquarters of Hong Kong, she operates in a global capacity and leads the North Asian Business streams of Consulting, Executive Search and Training and associated teams in the delivery of Talent Management, Education and Talent Acquisition services.

With more than 16 years Industry experience Cassandra has provided senior level executive recruiting and consulting services to organizations around the world, which delivers profitable leadership change to key organisations. Cassandra exemplifies excellence in her innate ability to connect executive talent with businesses across the supply chain.

Cassandra’s proven and highly successful approach melds strategic analysis with aggressive process-driven search execution. She works with companies, not for them. As such, she has become one of the leading executive recruiters in her field today and a thought leader in Talent Management and Learning & Development with a loyal client base and extensive professional network, including supply chain, procurement, retail and business leaders at all levels of business operations globally.

The Pros and Cons of External Project Management

August 2016
Author: Darryl Judd, Chief Operating Officer, Logistics Executive Group

Can external third party project managers (PMI) really add value?

We all know about “continuous improvement” and the ongoing cycle of revision and evaluation that runs through every organization and every job these days, as companies endlessly strive to stay competitive. Depending on how this is approached, change can either be a curse or an opportunity particularly if the change is large and disruptive to your organization. That is where project management plays a key role in turning change into an opportunity.

Mareike Walter-Paschkowski, Regional Consultant at Logistics Executive Group and a qualified Prince2 expert, adds her perspective, “In short-term, complex projects often require skills, avenues of approach and resources that are in most organizations not used or developed on a day-to-day basis. That is where outsourced project management services should come in.”

According to the Project Management Institute, a project is defined as:
“a temporary endeavor undertaken to create a unique product, service or result… it is temporary in that it has a defined beginning and end, defined scope and resources… a specific set of operations designed to accomplish a singular goal… and includes people who don’t usually work together – sometimes from different organizations and across multiple geographies.

The development of software for an improved business process, the construction of a building or bridge, the relief effort after a natural disaster, the expansion of sales into a new geographic market — all are projects.

And all must be expertly managed to deliver the on-time, on-budget results, learning and integration that organizations need.

Project management, then, is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.”

Today project management language permeates our everyday business vernacular. Concepts like TOC (theory of constraints) and BRM (benefits realization management) have colonized our daily language. The project management industry has grown exponentially with Institutes like PMI and concepts like Prince2 sprung up to meet the complexities of this new modality. In the case of Prince2, it is not only a tool but a methodology that you can be trained and certified in with different levels of certifications for professionals available (i.e. Prince2 foundation or Prince2 practitioner etc.)
It is, therefore, no wonder that middle managers may find it daunting when deciding on whether or not this additional layer of external expertise will bring value to their organization.

There are both pros and cons to be carefully weighed up when evaluating whether an outsourced project management team is the right solution for your company.

The benefits:
Amping up your workforce skill gaps: As mentioned above, there are specialist skills involved in project management. Bringing in external consultants will allow you the flexibility to fill these specific skill gaps that are only needed for the short-term.

Charging up workforce capability:
Often staff levels are stretched and there is no room for the extra workload involved in executing projects. Introducing external consultants can supplement the team’s skills. If the skill makeup of the external team is carefully put together, it can free up permanent staff members and allow them to get involved and gain exposure to new skills and experiences outside of their comfort zone. It can also keep staff free to get on with daily business or even unburden the overloaded workforce.

Budget considerations:
One of the foundations of professional project management is a tight consideration for financial management. On the outset, even though bringing in an external team may seem costly, it will save money over the life cycle of the project. This is based on the expertise they will bring to your team to keep to deadlines, projected budgets and project deliverables. Project Managers use time management, quality and risk tools that allow them to access and thoroughly understand the cost breakdown at every level of the business from team, task, project, business unit or company. These tools can also save a lot of money, by offering transparency over the whole project. They can identify if any negative impact is likely and which strategies to develop to handle these in case of occurrence They also can gain complete visibility on these costs for everyone in the organization so that resources are fully utilized or expeditiously redeployed if needed.

Transparency is another benefit over the entire project which is obtained through the use of tools such as project plans and status reports.

Overall flexibility:
Unlike the commitment of employing a fulltime project manager, the ability to fine tune or redirect resources and cash flow can be very competitive way of enhancing business agility.

Risks and pitfalls:
Lack of permanent staff buy-in: One of the key factors in project success comes down to how your permanent team respond because the need for change has to be understood and embraced for it to work. No matter how good the project is planned it will fail if there is no buy-in. This comes down to communication and consultation from the very start.

Project Sponsor:
The only way a project will succeed is if it is championed by a leader at the very top of the organization from beginning to end. Executive buy-in will communicate a clear mandate from top to bottom of the organization so it does not run off course.

Build on existing skills and talent:
Permanent staff may feel left out of the process and disengaged if they are not consulted. “On the flip side, this can be turned to an advantage as a project may be an excellent opportunity to develop existing staff. It is a good idea before commencing to make sure that if possible these staff are included as much as is practical. If, for example, you have a staff member who has identified WMS design as part of their career development, it may be a good idea to include them in your warehouse management system implementation on some level. “This will not only increase employee engagement but you’re your company’s skill inventory.” added Mareike.

Weaker connection between the external project team and the organization: The external team will not know the culture of the organization or have the internal relationships that internal staff can leverage. This can be overcome by having excellent communication and following the steps outlined above to win staff buy-in. Conversely, there is a benefit to having a clear untarnished perspective as an external consultant that will allow fresh ideas and perspectives.

Time wasted in explaining the company:
External project managers need to be briefed on all the complexities that are involved and this takes time which may be saved by utilizing an existing team. However, this can be overcome if there is clarity outlined in the planning stages. If clear outcomes and measures, results and timeframes are clarified from the beginning of the project so that both external consultants and the company are satisfied with the targets they are trying to achieve and they understand the variables and allow for them.

“First of all key project stakeholders (internal & external) need to agree on the project charter, which covers project objectives & constraints, scope, stakeholders, target benefits, budget and spending authority. This makes sure that expectations are aligned from the beginning and increases the probability for a successful project execution. In this way, both parties can equally appreciate what will make the project successful so that when it is completed they can both walk away feeling satisfied” concluded Mareike.

Differences in culture:
The external consultants and the internal team will probably need to work closely together. This could pose a problem if there is some discrepancy or clash between the ethos of the two cultures of the organization. The external consultants need to understand and be mindful of the existing company culture and to make concessions if needed. The more they can immerse themselves in their client’s company culture, the more successful they will be integrating into the change process and creating buy-in.

Another risk could be that the project is simple enough to be handled internally but due to the wrong evaluation you bring onboard external support without the right foundation. This adds unnecessary complexity instead of reducing it.

Through our own experience at Logistics Executive Group, we have found that the best way to succeed in our external consulting is to apply expertise, in areas such as Project Management always with an honesty and profound respect and sensitivity around our customer requirements.

While every situation needs to be assessed on its own merits, it is clear that project management methodologies can definitely add value to an organisation’s inventory. The benefits of bringing in an external team to manage can offer immeasurable benefit and advantage as long as there is a justified business case, thorough planning and engagement measures put in place from the outset.

What has your experience been with external project management? Have I covered off all the pros and cons? It would be interesting to hear your thoughts on the subject.

Find out more about our consulting services here:
www.logisticsexecutive.com/advisory

For information on Logistics Executive Salary Survey which includes project management salaries please find a free link to our website here:
www.logisticsexecutive.com/wp-content/uploads/2015/05/2015-Southeast-Asia-Salary-Guide-Low-Res.pdf

Darryl Judd
Chief Operating Officer, Logistics Executive Group

In 2015, Darryl was named as one the “Top 50 influential individuals in Asia’ Supply Chain, Manufacturing & Logistics industry” in the prestigious SCM Thought Leader publication by SCM World, recognising him as expert in the linkage of business strategy and supply chain best practices to human capital management. Darryl brings 28 years of executive leadership and consulting experience and is regular contributor on thought leadership across numerous industry publications and is a frequent speaker at international conferences and events on business leadership, strategy & people alignment and talent management. He was instrumental in the creation of Logistics Academy and presently holds an advisory board appointment with industry group LSCMS. In 2014, he was appointed as one of five global experts to IATA’s Global Innovation Award selection board and has held senior executive positions within the airline, air cargo and aircraft leasing industry.

Recent Australian Election Results Focus on Manufacturing

From London to Whyalla there is a call for more Government intervention

July 2016
Author: Maria King, Corporate Communications Manager, Logistics Executive Group

This has been strongly evidenced in the recent Australian election results were minority parties like the Nick Xenophon Team have shocked the two major Australian political parties to capture several key seats in the Senate and Lower House. As I write this they are narrowly contesting the seat of Grey, which is a traditionally staunch conservative Liberal seat. The fight in Grey hinges on Government funding to keep the steelworks industry alive there, which employs 6000 people.

According to Australian Senator, Nick Xenophon, his political aim, as an independent is to “drag both parties back to the center.” The growing popularity of minor political parties follows a global trend of popular disillusionment with the establishment that has spawned the likes of Brexit, Trump, Sanders and now the election of minority parties in Australian politics. It is clear that people are worried about their jobs and the future.

Senator Nick Xenophon standing outside of the Whyalla Steelworks

In Australia, the manufacturing sector has been a key focus of this concern. While the country had a robust manufacturing sector in the past, recently Australia has slipped behind Luxembourg to take the last place in the OECD nations in terms of manufacturing jobs as a share of total employment, according to a report from the new Centre for Future Work. The report, released in June 2016, identified policy settings that have contributed to the dramatic and unusual decline in Australian manufacturing and made some key recommendations.

“What is inevitable, is that any developed country which opts out of manufacturing will be opting out of over two-thirds of world merchandise trade,” said Jim Stanford, Director of the Centre for Future Work.

“There is abundant international evidence that smart, pro-active government engagement, aimed at deliberately enhancing strategic, high-value, export-oriented manufacturing, is not only possible – it is essential for modern industrial success.” Prophetically, Mr Stanford added that “Governments are not powerless in this area. There are clear policy options to encourage manufacturing, and there is strong community support for politicians to take them up.”

The Future Work report makes a good argument for the promotion of manufacturing and its importance to the Australian economy. It puts forward a case for a more focused and interventionist contribution by Government to further develop this sector.

It will be interesting to see how the new Government in Australia shapes up and whether the lessons have been learned. It is hoped we will see a major policy shift and investment in the Manufacturing and Supply Chain sectors. A staunching of the “Brain Drain” of Australian Professionals in Supply Chain, Logistics, Manufacturing and Innovation disciplines who, due to the decline of their sector, have been moving off-shore for career opportunities. While this has been of enormous advantage for emerging economies around the world, it will eventually lead to a decline in-country if it proceeds.

If you are a Logistics, Supply Chain professional I would be interested to hear your thoughts.

Maria King
Corporate Communications Manager, Logistics Executive Group

Maria has been working in the Supply Chain and Logistics Industry for almost two decades in her capacity as a Human Resources and Communications Professional. In that time, she has managed a variety of diverse challenges, including: project management, corporate communications and content management, and human resources initiatives.

Changing Role of Psychometric Testing

Will there continue to be a role for Psychometric Assessment in management processes?

June 2016
Author: Keng Pang, Senior Consultant – Asia, Logistics Executive Group

In recent years there has been a trend for employers to develop a more inclusive workforce that incorporates all sorts of differences including geographic and cultural boundaries, gender, age or anything else. This is where psychometric testing has really come into its own as an impartial testing tool. It is particularly useful as employers move towards strategies aimed at hiring a more diverse workforce were these assessments provide information on skills and abilities in areas that are usually hard to measure like behaviour.

Their impartiality is also an enormous advantage in assisting organisations meet the increasing legislative requirement for equality in the workforce.  Psychometric testing in this instance can provide a transparent, evidence-based recruitment tool that satisfies equal opportunity standards.

They will also be used more widely as other recruitment measures are outdated, such as the new trend by companies such as Google and Ernst & Young to remove graduate requirements from their recruitment processes becomes more prevalent.

Even universities are moving away from placing a value measure on their degrees as new research suggests that when hiring decisions are made more on a candidate’s soft skills better decisions are made.  As Universities remove grading from their assessments, testing can be used as a replacement means of assessing ability in different areas such as literacy, as required by job roles.

More companies than ever are using psychometric testing.  According to the (May 2015) Aberdeen Group study, 71% of Best-in Class companies used psychometric testing. This was an increase in their use by 13% which correlated with an increase of 15% year-on-year improvement in hiring manager satisfaction.  They also state “Businesses that use pre-hire assessments are 36% more likely than all others to be satisfied with their new hires.”

DISC training, such as Logistics Executive Group’s Myprofile, provide valuable information about how a person is likely to behave and react in certain situations. This is of huge benefit to managers, teams and to individuals as it offers a deeper insight into how they can benefit from their differences and how to communicate and motivate each other. “We have been incorporating Myprofile in our recruitment process since 2005 to help us find the right person, with the right attitude and the best talent for our clients. Our clients tell us that Myprofile is one of the fastest, most cost effective and easiest ways to identify the best candidate for the job,” said Kim Winter, CEO of Logistics Executive Group.

Myprofile provides a report for each applicant assessed that features:

• A profile summary for each applicant
• Style graphs indicating intensity of each behaviour
• Preferred working conditions for this person
• How to communicate effectively for maximum performance
• Key behaviour traits
• Value to the organisation
• Career choices that best suit this person’s behavioural style
• Management style and strengths
• Work style review
• Is this person good for the job?

Different psychometric tests also assess cognitive ability such as critical thinking, numerical or abstract thinking that can be tailored to the requirements required by specific roles in the hiring process.

Whilst psychometric testing is known in today’s business world for its role in the recruitment process, in assessing candidate suitability, it has enormous potential for various ongoing uses.

It has the potential for multiple uses to engage existing employees, build teams and assist in career development. As an interactive tool it can build an employer brand by for example incorporating a questionnaire on an employer’s website or it can be used an ongoing tool that gauges and manages corporate culture. Employers are also using assessments in internal talent development and to help employees further their own careers. For example, at cut-e, they’ve built an internal assessment for Dubai Duty Free which assesses the strengths, interests and behavior of their 7,000 staff at Dubai Airport. Individuals can then be automatically identified and matched with future jobs that might suit them.

It is clear that psychometric assessment is a part of the human resources function that is here to stay but what about its use in other areas? It can be uses to attract talented candidates by incorporating trends like gamification on websites.  Gamification is the process of incorporating elements of a game to other areas of activity such as online marketing to encourage engagement. “Gamification is really exciting because it makes the hard stuff fun” says Kim Winter. For example, easyJet use various interactive questionnaires on their website that allow candidates to find out more about the company.

App-based psychometric testing is another area that will develop as a means of providing candidates with a more user friendly experience that is more user friendly and inclusive in keeping with the trend of a more diverse and geographically challenged candidate pool.

“The bottom line” continued Kim Winter, “is that companies want the best people working for them and to cultivate an environment that will bring out their best.  Psychometric tools can provide an ongoing way of helping managers achieve this in ways that are only limited by our imagination”.

As part of their consultative process, Logistics Executive Group offers a complete set of tools to enable managers and their staff find work satisfaction from Assessments for Recruitment and Selection, Professional Development, 360 Degree Surveys, Graduates, Team Effectiveness Measures, Team & Team Member Personality Profiling, and Executive Team and Board Reviews.

It is predicted that the use of psychometric tests will only continue to grow and develop in all sorts of exciting ways. Darryl Judd envisages that the use of psychometric testing can only continue to evolve. “In time they will become immersed in new and exciting ways. They will continue to enhance our work environment and enrich our personal satisfaction through a deeper self-awareness. This can only be a positive thing.” It is also incredibly useful thing in a work environment that is continuously more demanding in pace, complexity and change.

To find out more about the psychometric services offered by Logistics Executive please visit our website: www.logisticsexecutive.com/talent/online-behavioural-skill-assessments/myprofile-online-behavioural-assessments

Keng Pang
Senior Consultant – Asia, Logistics Executive Group

Keng has a total of 20 years of working experience; of which 17 years were focused on the logistics industry, in both Singapore and China. She has accumulated experiences in a 3PL environment for sectors in high-tech manufacturing, luxury retailers , FMCG, Oil & Gas, Chemical and Banking and Financial industry.

The 10 years of general management experience has sharpened her insight into customers’ needs and constraints versus the market trends enabling her to understand corporate and shareholders’ perspectives. This has enabled her to make important and critical decisions and effectively manage resources, focusing in areas which reap desired results.

Keng is also a PMC trained Business Advisory Consultant and has also been trained in assessing Organization Business Excellence.

Logistics Industry Consolidation Continues Into 2016

May 2016
Author: Kimble Winter, Chief Executive Officer, Logistics Executive Group

There has been unprecedented growth in mergers and acquisitions within the Logistics and Supply Chain industry since 2015. The impact of this is potentially going to change the industry in far-reaching ways if it continues.

“Globally, in our offices in the Middle East and Asia in particular, we have noticed a growing demand for corporate advisory services in Mergers and Acquisitions practice,” said Darryl Judd, who leads Logistics Executive Group’s Corporate Advisory Services. “There has a been a marked increase the number of qualified client approaches since Q3 last year and this demand has continued into 2016. The Middle East and Asia remain the most active with customers wishing to expand their business footprints or add strategic niche operations to meet new challenges and ensure their competitiveness” he added.

According to Supply Chain Quarterly’s annual survey[1], CEO’s would predict every year that there would be an emphasis on acquisitions. However, counter to this survey prediction, relatively few large-scale acquisitions occurred in the logistics industry between 2008 and 2014. The Supply Chain Quarter’s staff found this puzzling so in their 2014 survey they asked CEOs why merger and acquisition activity continued to lag behind expectations.

Some said this was because acquisitions were overpriced, some mentioned post-acquisition integration problems, others stated they had achieved the desired scale through previous acquisitions and organic growth. In early 2014 however this began to change on an unprecedented scale. There was a new wave of large-scale mergers and acquisitions in the logistics industry. Incredibly, between 2014 and September 2015, US$20 billion was spent on acquisitions in the industry. This buying frenzy is continuing to this day.

The trigger for these acquisitions clustered around four categories: consumer demand pressures, globalisation, financial considerations and economic conditions. Consumer demands have increased considerably with the advent of e-commerce which has enabling consumers to reach further geographic markets and for business to find seamless solutions to provide them with their purchases.

Companies have had to manage multi-channel retailing and consumer relationships in a more sophisticated, complex method that is heavily integrated with logistics services and technology. Barriers are starting to breakdown, not just in terms of geography but in regards to information sharing and traditional industry roles. Businesses are starting to trust 3PL ‘s more with their sensitive company information and this has allowed these providers to integrate and manage their services better.

Thanks to the emergence of e-retailing with the phenomena exemplified by Amazon and its Asian counterpart, Alibaba, 3PL’s are under more pressure than ever to provide customers with a broad range of services within an expanding geographical footprint. Acquisitions provide an efficient way of achieving this. Often in countries like India and China where there are some restrictions on foreigners doing business, it is easier to achieve a footprint through acquisition rather than with a direct investment.

We are also finally experiencing an emergence from the Global Financial Crisis. Despite the economic slowdown in China, various wars in parts of the world like Syria and other indicators of market volatility there seems to be an overall feeling of cautious confidence.

However, Penske and Capgemini Consulting’s annual State of Logistics Outsourcing Study of September 2015 suggest that this sudden trend could be attributed to what they call “defensive acquisitions.” According to this theory, one player makes a move at domino effect occurs. If one 3PL starts to expand by acquisition the others think, from a defensive point of view, that they also need to follow suit in order to stay competitive.

Regardless of these various reasons, it seems that consolidation is going to remain a dominant theme in the logistics and supply chain sector that is set to continue. In their predictions for global logistics 2016, Gartner says they expect that by 2020 the top ten, global 3PL’s will control 80% of the world’s logistics volume. They expect logistics service providers will evolve to meet the fast-paced, specialist demands of different market segments. They will evolve into a relatively small number of these huge global 3PLs who will be serviced by small niche players who will work for them on a contract basis.

A report by PWC seems to support this theory. In their study, PWC found total M&A activity in 2015 nearly doubled from the previous year with an increase from US$87 billion to US$172.7 billion. PWC also found that the number of what they call “megadeals” globally (which PWC defines as being of US$1 billion or more) grew considerably in 2015 to 28 deals which are up from 17 deals the previous year. This growth constituted an increased the average deal value to US$771 million up from US$376.7 million in 2014.

It is predict that the result of this industry consolidation is that the balance of power will shift from shippers to 3PLs, which according to Supply Chain Digest[2] may lead to a major infection point in the supply chain. “It is a compelling argument” continued Darryl Judd. “3PL’s have tried for years to provide more sophisticated services for their customers. Since the GFC, the role of Logistics has really stepped up to become a critical business function”.

“Logistics service providers are becoming less interested in competing by way of lower prices and more interested in competing by way of offering. They are setting up long term relationships based on infrastructure investment and industry knowledge.” In this way, the logistics function is continuing to take prominence as a critical business success driver rather than the backroom appendage. “Consumers will continue a faster, more efficient logistics service and this will be the deciding factor that will either make or break a business so their reliance on 3PL’s will only increase” concluded Darryl Judd.

No doubt there are exciting times ahead for the industry and the acquisition phase will continue for some time to come.

[1] Supply Chain Quarterly – Quarter 3 2015
[2] “Supply Chain Graphic of the Week: 3PL Industry Consolidation Continues at a Rapid Pace” Supply Chain Digest Feb 11, 2016

Kimble Winter
Chief Executive Officer, Logistics Executive Group

The founder of the company, Kimble is an acknowledged specialist in Executive Recruitment across Logistics and Supply Chain sectors. A dynamic and engaging senior executive with 35 years leadership experience spanning Corporate Advisory, Executive Coaching, Public Speaking, Search & Recruitment across the Supply Chain, Logistics, FMCG, Retail, Resources, Industrial, Disaster Relief and Humanitarian sectors. Kimble has built an international reputation as the founder (1999) of Logistics Executive Group which delivers whole of lifecycle business services including Search & Executive Recruitment, Corporate Advisory, Online Education and Executive Coaching / Mentoring.

Leading for the Future with EI

April 2016
Author: Mareike Walter-Paschkowski, Regional Manager Middle East & Africa, Logistics Executive Group

Various trends and developments force companies and organizations to rethink and refocus on how to attract and develop talent for the future. Below I would like to highlight 2 trends that will have an impact on most organizations and one fascinating way to approach this.

Industry 4.0 seems to be the current buzzword in the economic world, I mention this as it was a regular theme that was discussed when the top management of the 350 biggest companies around the globe were interviewed by the World Economic Forum in order to analyze the impact of recent developments in industrial automation. This as yet unpublished study predicts that due to increasing use of automation and the proceeding digitization of the working environment and processes the industrialized countries will lose 5 million jobs within the next 5 years. This will mainly affect jobs in offices or administrative positions with highly standardized duties, indicated by the fact that automation changes have already taken place in most factories and manufacturing plants. In contrast the study predicts that only 2 million new jobs will be created and the majority of these will require specialists in the areas of I.T. and technology. What we also see is that many companies still underestimate the importance of certain skills (i.e. change management, project management, communication and conflict management) it is essential to utilize this development in the best possible way. Businesses that are able to meet individual employee expectations will win the battle for talent in the future.

CHALLENGE NUMBER 1:
Support current and future employees to gain the hard and soft skills needed to face the changes coming with the Industry 4.0.

CHALLENGE NUMBER 2:
Create a comprehensive, forward looking HR strategy that respects the values and strength of individuals in their organization.

A sustainable footprint is more than ever on the agenda for organizations, companies and individuals. Faced with developments such as climate change, shortage of natural resources and a shifted awareness of clients and employees to more sustainable products & services, making a transition to a sustainable business presents significant opportunities. Companies that are ahead of the game, leading the way to embedded sustainability into the very core of their strategy and operations, are the ones most likely to succeed in the face of current and future challenges. In 2005 the World Summit on Social Development identified 3 areas to focus on, including economic and social development as well as environmental protection. What we actually see today is that most companies and organizations still focus more on the economic and environmental aspect of sustainability. The social aspect is largely ignored and the impact widely underestimated. To get the most out of sustainability activities, companies will have to take all 3 areas of sustainability into account, as they are interrelated and as such influence each other.

CHALLENGE NUMBER 3:
Implement and integrate a comprehensive sustainability strategy that generates a shift from “nice to have” to “business as usual”.

CHALLENGE NUMBER 4:
Focus on the people aspect of sustainability even if its more difficult to calculate the business case behind these activities.

Taking all of the above into account, it can be safely assumed that the 21st century is an era of rapid modernization and change and this pertains to politics, the economy and increasingly towards social systems. Stability and predictability are factors we can no longer rely on in today’s world. From a human resource perspective these developments create the need for urgent and fundamental change in the way we attract, manage and develop people.
Historically, IQ was the most important factor for a successful career. But today people and especially leaders need to develop many additional qualities which will enable them to effectively deal with stress, ever changing work processes and a lack of job security. In this new viral world, personal impressions make a difference, emotions and personal values have increasingly made their way into our professional and business lives.

That’s why it’s even more important to understand the dynamics of how and why some people handle change and challenges more successfully than others.

Many concepts have been evolved to explain what enables certain people to be more successful than others, and today’s understanding is that Emotional Intelligence (EI) is one factor in this. Certainly this is not a new insight as the impact and processes behind EI have been widely examined over the last 20 years but facing Industry 4.0 as well as the trend into a sustainable business it might be the perfect time to have another look at what is really driving successful people.

What is EI?
Following Travis Bradberry and his book “Emotional Intelligence 2.0” (2009) there are 3 factors that make a person “tick”. IQ, EI and Personality. According to his findings there is no known connection between IQ and EI and it’s not possible to predict emotional intelligence based on how smart someone is or what kind of personality he has. Another finding is that IQ and personality (for adults) stay stable over a lifetime and doesn’t change. Interestingly for EI there is a uniform understanding that the related skills build up on each other and – independent of age – can be enhanced with suitable training.

A famous theoretical model created by Daniel Goleman includes 4 main aspects of Emotional Intelligence: Self-Awareness, Social-Awareness, Self-Management and Relationship-Management.

He defined EI as “the ability to recognize, understand and manage our own emotions and to recognize, understand and influence the emotions of others. In practical terms, this means being aware that emotions can drive our behavior and impact people (positively and negatively), and learning how to manage those emotions – both our own and others – especially when we are under pressure.”

Is there a link between leadership styles and EI?
Furthermore his consulting firm Hay/McBer analyzed the relationship between EI and leadership styles. They found 6 distinct leadership styles, each springing from different components of emotional intelligence. The research summarized the styles, their origin, when they work best and their impact on an organizations climate.

The main findings were summarized as following:

• The 6 styles, taken individually, appear to have a direct and unique impact on the working atmosphere of a company (climate), division or team, and in turn, on its financial performance.
• The research indicates that leaders with the best results do not rely on one leadership style, they use most of them in a given week – seamlessly and in different measure – depending on the business situation.
• According to report, the visionary leadership style has the most positive effect on working atmosphere of a company, but 3 others Affiliate, Democratic and Coaching, follow close behind. That said, the research indicates that no style should be relied on exclusively and all have at least short term uses.

How to measure your EI?
There are various tools and platforms available that support individuals and organizations to measure and understand Emotional Intelligence. The EQ-I (Bar-On) is a self-report instrument to assess those personal qualities that enable some people to possess better emotional well-being than others. The Emotional Competence Inventory (Goleman) is a 360 degree instrument, where people evaluate the individuals within an organization (Individual Feedback Reports), or the organization as a whole (Work Force Audits). These audits can provide an organizational profile for any size group within the company. In addition there are various training and certification programs available which enable leaders or people in HR related functions to broaden and professionalize their EI skills and expertise. Finally for all employees coaching and mentoring programs can add an incredible value to understand and develop Emotional Intelligence.

What are the Pros and Cons?
When EI found its way into the corporate world various studies and reports have analyzed the impact and significance of EI. Especially in the beginning most research illustrated highly positive outcome for organizations if they focus on EI in their Talent Acquisition and Development programs. Recent examples such as the Global Empathy Index (2015) from the Lady Geek advocacy agency shows that businesses are more profitable and productive when they act ethically, treat their staff well, and communicate better with their customers. The top 10 companies in the Global Empathy Index 2015 increased in value more than twice as much as the bottom 10 and generated 50% more earnings. (For more details go to https://hbr.org/2015/11/2015-empathy-index).

Another example is the EI Consortium that publishes various points that build a case for how emotional intelligence contributes to the bottom line in any work organization. In addition they publish latest research findings that support the positive outcome of EI in the business world. One example: For 515 senior executives analyzed by the search firm Egon Zehnder International, those who were primarily strong in emotional intelligence were more likely to succeed than those who were strongest in either relevant previous experience or IQ. In other words, emotional intelligence was a better predictor of success than either relevant previous experience or high IQ. More specifically, the executive was high in emotional intelligence in 74 percent of the successes and only in 24 percent of the failures. For the full details go to http://www.eiconsortium.org/reports/business_case_for_ei.html.

But as it is with all tools and methods: “Poison is in everything, and no thing is without poison. The dosage makes it either a poison or a remedy” (quote Paracelsus).

Said that, critical voices have come up and new studies show the potential downside of EI. Review finds that, in many studies, poor research methodology has exaggerated the significance of EI. A group of Austrian psychologists for example, reported a correlation between EI and narcissism, raising the possibility that narcissists with high EI might use their “charming, interesting, and even seductive” qualities for “malicious purposes,” such as deceiving others. Another study with college students shows, that people with high EI might be more over-credulous due to overconfidence in their ability to read others.

What to take away?

• Creating Awareness around Emotional intelligence has never been easier. There is no lack of information and no shortage of partners who can help you to develop, implement and audit a business model that will support you in getting it right. There are various tools and services (training programs, mentoring & coaching) available that help individuals and organization to measure EI and to develop and increase required skills such as Self-Awareness, Social-Awareness, Self-Management and Relationship-Management.
• To be effective, individuals and especially leaders will need more than ever to be able to influence others through gaining their respect and enlisting their passions. And the more EI skills a leader has at his disposal, the more flexible and seamless he can switch styles depending on the situation and in turn the better the outcome will be. A leadership coaching style is the least utilized but it’s also maybe the most effective style to add to your soft skills portfolio.
• Higher emotional intelligence translates into better performance. Especially in jobs that require extensive attention to emotions (this counts for all jobs with social interaction such as sales, marketing, project management and all leadership or management roles).
• There’s a fine line between motivation and manipulation in relation to EI. People could use emotional intelligence for nefarious ends, but more often, emotional skills will be simply instrumental tools for goal accomplishment.

Mareike Walter-Paschkowski
Regional Manager Middle East & Africa, Logistics Executive Group

Mareike is a dynamic and engaging Supply Chain project management professional with more than 12 years professional experience in managing complex logistics and supply chain projects. As Practice Leader of Logistics Executive Group in the Middle East, she delivers whole-of-lifecycle talent management including Corporate Advisory Services, Executive Search and Executive Coaching across the supply chain, logistics, FMCG, retail, resources, industrial, disaster relief and humanitarian sectors. A hands-on Consultant working in a team in Dubai together with their offices in Sydney, Melbourne, Singapore, Hong Kong, Shanghai, Chennai, Mumbai, Delhi and London, Mareike holds a PRINCE2 (Projects IN Controlled Environments) foundation and practitioner certification of APMG International.