Globalization occurred at an extremely rapid pace over the past twenty years. As manufacturing moved into emerging regions, finding trained, competent, and affordable talent became the challenge. As leaders, we could teach our employees about trains and trucks and airplanes, but we could not teach them how to think (and thinking was what was needed). For many businesses, finding the right people became a desperate mission to ensure that the quality, cost, and delivery targets were achieved.
Historically, many businesses had developed an extensive, global network with universities and professional organizations. Western companies built strong partnerships in the US, Netherlands, Germany, England, and Scotland which fed them people and taught logistics curriculums with a developing focus on supply chain management. However, as the world quickly evolved, there were no relationships in emerging regions, so businesses were forced to recruit expensive international students from western campuses.
Throughout this period, there was much talk by universities of a talent gap in the supply chain industry, but never any talk of needs outside of western countries. Many failed to grasp the sheer fact of globalization—people, not systems run and operate a business. Additionally, at many of the most prestigious institutions, subjects like supply chain finance and international trade were simply not taught, leaving many graduates lacking the basic business acumen to intelligently prosper in their careers. As senior supply chain executives attempted to assert themselves onto campuses, no one seemed to care nor was looking for a contrarian view to what was already being taught. In short, there was no Voice of the Customer (VOC) for businesses. Many US universities became fixated on rankings, rather than producing the quality graduates that the industry needed. Like college football, it was all about who is Number 1, not how their graduates perform in the workplace.
Digging deeper, professional associations were of little help as they had no chapters in emerging regions, nor comprehended the challenges faced by practitioners. National conferences provided little guidance, with everyone talking, but no one offering viable solutions. Compounding this, academic journals only spoke in academic-speak; and were often unreadable. They renamed programs, like Toyota Production System to Business Process Excellence (BPE) while spending their time discussing areas that had no relevance to practitioners. These authors failed to understand the basic rigors, requirements, and realities of running a global business, therefore this form of communication lost its relevance to those doing the work.
So, this world that had been historically relied upon to feed people, processes, and tools into industry, became a maze of entities just feeding each other to ensure their own survival, without offering solutions to their customers. Many leaders began to ask the tough questions:
- What are the talent requirements of supply chain for the future?
- How is business education globally structured?
- Can a business find adequate people, to run their operations in emerging regions?
Supply Chain and the Academic World
A question that is continually asked in academia is: “Are our educational sources evolving to meet the needs of the modern logistician?” (Stanley E. Fawcett and Stephen M. Rutner 2013) Data repeatedly yields that logistics and supply chain educational resources are not evolving at the pace and in the way expected by professionals (Stanley E. Fawcett and Stephen M. Rutner 2013). This situation is exacerbated by the exodus of baby boomers from the workforce. Some studies assert that 25 to 33 percent of the current supply chain workforce is at or beyond retirement age, and the backfill pipeline is inadequate to satisfy replenishment demand (Harrington, Smith 2017).
While logistics and supply chain management promote cross-functional process integration, many universities are still struggling to redesign their curriculums to reflect such complexity. Another problem is differing views on the appropriate balance between subject knowledge and general management skills required for graduates (Gammelgaard and Larson, 2001).
For instance, globally, Supply Chain Finance is rarely taught, however, it is a desperately needed skill.
Furthermore, there is a growing split between practitioners and academics. As academics move to improve the discipline, it appears to be widening the gap between the universities and the business world. The stress to increase rigor and be theory-based may improve academic research and university rankings among academics, however; it is just as likely to alienate practitioners in an era of declining readership of journals (Fawcett and Waller, 2011).
Many writers place excessive emphasis on technology, and not enough on the real problems (Burgess 1998). These writers fundamentally do not understand that companies have invested hundreds of millions of dollars in technologies over the past twenty years, only to still be looking for their elusive ROI.
These same writers invent terms like Industry 4.0, which is simply a rewriting Taiichi Ohno with new words for areas like one-piece flow, safety, resiliency, and scalability. Practitioners see right through this; costing these writers credibility. As described in the article Making the Shift, industry must begin to act like a real customer. That is, companies need to communicate that if academe will not prepare graduates for the real world, industry will find a new source (Amydee M. Fawcett and Stanley E. Fawcett 2016).
Company Culture in a Global Economy
Top management teams of large corporations, particularly in North America, Europe, and Japan, acknowledge that globalization is the most critical challenge they face today. These writers go on to say: Fast-growing economies often provide poor soil for profits. The cause? A lack of specialized intermediary firms and regulatory systems on which multinational companies depend (Tarun Khanna, Krishna G. Palepu, and Jayant Sinha 2006).
Successful businesses develop strategies for working in emerging and frontier regions that are different from those they use at home. Therefore, before recruiting employees, corporations have to screen large numbers of candidates themselves because there aren’t many search firms that can do the job for them. (Tarun Khanna, Krishna G. Palepu, and Jayant Sinha 2006).
The Morgan Stanley Market indexes are among the most respected benchmarks in the financial industry. Collectively, they provide detailed market information for more than 80 countries across developed, emerging, and frontier markets—representing 99% of the investable opportunity. These indexes provide investors with the ability to analyze cross-regional comparisons by country and industry.
The volatility, of these numbers, can easily spook the marketplace. So, stability is key to success. An example is that while Vietnam may have a booming economy, it is still considered a Frontier market due to the risk associated with investing there. For this blog, Vietnam is the focus for analysis as a ‘Frontier’ nation, with multinational companies in need of immediate support for business leaders, managers, and supervisors.
Vietnam
Since the economic reforms initiated in Vietnam in 1986, the economy has been emerging vibrantly. From a US$10 billion economy in 1986, with a huge accumulated external debt, Vietnam expanded its total annual output to an estimate of US$110 billion by the end of 2011 (Quan Hoang Vuong, Tri Dung Tran, Nancy Napier and Thuy Ha Dau 2013).
Business enterprises have significantly contributed to the Vietnamese economy’s growth and development through trade activities and foreign direct investment.
As stated by Phan Thi Thanh Nhan, Ministry of Planning and Investment (Foreign Investment Agency 2017), the goals for FDI are:
- Generating higher wages (through creating higher-value output per worker)
- Increasing local skills development, technology transfer, and R&D
- Stimulating more efficient use of resources (energy, land, water, raw materials, etc.)
- Creating opportunities for local entrepreneurs and investors to work with international companies as part of their global value chain
- Boosting the competitiveness of all businesses in Vietnam (e.g. by improving supply chains, logistics, etc.)
In reality, about two-thirds of the state’s budget revenues come from major taxes on business activities: VAT (23%); corporate income taxes (30%); and import-export tariffs (13%). This fact is important and relevant to business education because politicians have gradually come to appreciate the power of market forces and to rely on them to obtain financing for their political mandates (Quan Hoang Vuong, Tri Dung Tran, Nancy Napier, and Thuy Ha Dau 2013).
Vietnam’s history has witnessed the nation’s constant effort to learn from the outside world. This effort paradoxically co-exists with the country’s aspiration to escape from foreign domination, to protect national independence, and to preserve national identity.
Discussions of foreign influences in the Vietnamese education system should be situated within the overall political and historical condition of Vietnam, which has been characterized by the influence of successive external forces and foreign countries (Ly Thi Tran, Mai Ngo, Nhai Nguyen & Xuan Thu Dang 2017).
In the 1940s, Vietnam adopted the Soviet educational model. The Vietnamese central government strictly controlled human resource planning. Education institutes narrowly trained students into specific proficiencies (Huong & Fry, 2004). Vietnamese universities have since been criticized for overly focusing on proficiency training, but neglecting soft skill cultivation (Trung & Swierczek, 2009).
It is also important to discuss the cultural dimension of education in Vietnam. In the Confucian society of Vietnam, the longstanding social ranking of “Gentry Scholar/Intellectual Official – Farmer – Craftsman – Trade/Businessman” not only classifies strata of the society but also their corresponding status and dignity. In modern Vietnam, this social order implies that a well-educated person should find a job in the government administration or at least work for a state-owned enterprise (Quan Hoang Vuong, Tri Dung Tran, Nancy Napier, and Thuy Ha Dau 2013).
As Vietnam’s economy has emerged many recognize the need for stronger business and management education but there is a mismatch between skills, education, and industry needs. Despite the expansion both in the number of higher education institutions, student enrollment, and efforts in enhancing teaching and learning quality as well as institutional autonomy, the Vietnamese higher education system faces a range of challenges, especially concerning the outdated curriculum, inadequate research capacity, and ineffective governance. (Ly Thi Tran, Mai Ngo, Nhai Nguyen & Xuan Thu Dang 2017).
Consequently, there is a gap in the literature (and overall knowledge) for:
- How academia and practitioners define the talent requirements for supply chain
- If there are differences in these requirements between the developed and the emerging world?
- Whether a multinational business can find adequate, trained resources to run their operations in an emerging region.
Next time, we’ll go deeper into the divide between academe and industry and how to bridge the gap to support frontier nations like Vietnam in empowering a smarter, more resilient supply chain.