The Chain Drain

February 10, 2022

Welcome back to a new edition of The Supply Times. This week, we’ll take a look at how Covid has caused disruptions to the supply chain—again—and how forward-thinking bosses can hope to retain top talent at their companies.

Industry Highlights: Relief In Sight, or Just a Mirage?

If you saw relief from the supply chain pinch on the horizon, you might want to get your prescription checked. The Q4 earnings being released this month paint a picture of industries still grappling with shortages even after most economists predicted that 2022 would usher in more stability.

Notable companies like GE and Raytheon reported Q4 losses, blaming supply chain disruptions as a primary factor. And most aren’t expecting it to get better in the near future. According to an Economist report, Toyota is already cutting its February vehicle output by 18% due to a lack of microchips, and container shipping rates are creeping back up to last summer’s record levels.

What’s changed since December, when companies expressed so much optimism about things returning to normal?

Most of the lingering issues resulted from the Omicron variant of Covid, which was far less deadly than its predecessors but far more contagious. Omicron sent millions of workers home to quarantine, placing a significant burden on companies—most of which were already running lean—to pick up the slack.

This is especially true in the service sector, where staff shortages are not just slowing recovery—it’s going backwards. Bloomberg reports many bars and restaurants who teetered on the edge of oblivion in 2020 and 2021 are now shuttering for good. Restaurateurs said they were dealing with staff shortages not only within their own establishments but also from their suppliers. No delivery, no food, no money.

“Supply chain-driven inflationary costs were unexpectedly amplified by Omicron and rapidly accelerated in December,” Starbucks Chief Executive Kevin Johnson said on Feb 1. “For the balance of the year, we expect these costs to increase versus our previous estimate.”

Still, Commerce Secretary Gina Raimondo told CNN Business that Omicron, too, shall pass. “All of this is temporary,” Raimondo said. “But at the moment, it doesn’t feel great.”

The Future of Work - The Benefits of Sticking Around

The Great Resignation demonstrated employees were no longer shy about quitting their jobs to find something better, and though it took companies the better part of 2021 to get over their denial, most have begun putting new incentives in place to retain their top talent.

Here are five strategies experts suggest that companies should employ to keep its staffs, courtesy of the Wall Street Journal:

  • More Proactive Managers: Marketing strategy consultant Dorie Clark believes that companies must place a disproportionate emphasis on identifying managers who prioritize company culture and excel in making people feel part of a team. Transactional managers will now need to learn new skills or risk their people leaving in droves.

  • Teams Decide Compensation: Keith Ferrazzi, chairman of a global consulting firm, predicts that teamwork will become more vital to company success in the future—to the point where teams will weigh in on the decision of individual compensation. He says few managers do that now because they want individual accountability, but compensation that could be awarded against a shared mission could jibe well with workers’ desire to feel a shared sense of ownership for accomplishing goals.

  • Gray-Collar Strategy: HR consultant Laurie Ruettimann says one way to open up blocked talent pipelines is to think about upskilling and reskilling older professionals who’ve either aged out of their former companies or opted out of conventional employment. While the majority of training dollars go to the 25-35 age bracket, a shift towards identifying opportunities for highly-skilled mature workers might be worth the investment.

  • Better Time Off: While every company provides their employees some form of vacation opportunity, HR chief executive Laszlo Bock says it might be time to take a more structured approach. “There’s something powerful about giving everyone time off at the same time, during the workweek,” Bock says. “When you make time off predictable and structured and make it on a workday, it actually has a disproportionate benefit.”

  • More Than Just a Holiday Party: MIT senior lecturer Donald Sull says he wants to see companies encourage employees to cut loose when at the office. Using in-person time for fellowship and teambuilding have significantly lower attrition rates—even during the Great Resignation.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About

RE: Supply Chain, Work, and Beyond

  • Read: AI 2041: Ten Visions for Our Future by Kai-Fu Lee and Chen Qiufan.How will artificial intelligence change our world in the next 20 years? According to former Apple, Microsoft, and Google executive Kai-Fu Lee, quite a lot. Lee teamed up with sci-fi writer Chen Qiufan to produce this book of 10 fiction short stories about how AI will shape the job industry, music, culture, and the way we live our lives. It’s Black Mirror written by someone who’s spent his career in the belly of the tech beast.

  • Watch: Speaking of AI, this Bloomberg digital original describes how companies are using artificial intelligence to score resumes and even conduct interviews. Automating the applicant screening process is the only way many big companies can sift through the thousands of applications they’re receiving, but is this new software just making bias more efficient? That’s a question lawmakers are beginning to ask.

  • Listen: If you’re interested in hearing the dulcet tones of yours truly, head over to a recent episode of the One Away Show, a podcast hosted by BW Missions CEO Bryan Wish. In the episode, I discuss how my eclectic career path and the generosity of my peers and colleagues shaped my pursuit of becoming a supply chain and talent management expert.

  • Think: Here’s a shuddering thought for us all: giving the dreaded IRS our biometrics. Taxpayers can currently access IRS records with a username and password, but the Wall Street Journal reported that starting this summer, anyone interested in doing so would need to provide a face scan, which will be stored in a database for future logins. The IRS also explained it intends to use the phone used to take the selfie as a way to track geolocation. I’m sorry, what? It’s a move that even progressive policymakers are calling “Big Brother tactics.”Fortunately, right before this newsletter went to press, the WSJ reported the agency would be “walking back” its biometrics plan. Given the IRS’ bumbling reputation, it’s a good move, but was there a larger motive at hand? Could this program’s introduction merely be a trial balloon to gauge the public’s comfort with government agencies dipping their toes into the biometric pond?

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