Universities, Schools Lack Adequate Funding to Meet ‘Critical’ Need for Supply-Chain Workers

By Daniel P. Bearth, Senior Features Writer

This story appears in the Sept. 27 print edition of Transport Topics.

Editor’s note: Click here for Publisher’s Note that includes links to stories and logistics education program lists, and click here for an article on logistics students.

As demand for people with transportation and logistics skills grows, many colleges and universities are finding it difficult to expand programs to meet the needs of shippers and freight carriers who are seeking trained workers and management personnel.

Money “is an issue,” said John Ozment, a professor at the University of Arkansas’ Walton College of Business in Fayetteville, Ark., who has done research on logistics education.

“Some schools have added programs, but others have dropped programs. And none of the big programs are able to offer a full curriculum,” he said.

The inability to adequately fund expansion of traditional academic programs means that in the future, a greater share of logistics education may come from online educational programs, employer-sponsored training and industry certification, according to school and transportation-industry officials interviewed by Transport Topics.

“The need is very critical,” said John Caltagirone, vice president of The Revere Group, a Chicago consulting firm that advises schools and businesses on supply chain issues. “My clients are desperately seeking students who have at least a fundamental understanding of logistics and supply chain management. The need is not going to decline, but is going to dramatically increase.”

Most schools and many businesses don’t fully understand the importance of logistics and supply chain management, said Caltagirone, who teaches a course in global supply chain management at Loyola University in Chicago.

“My course is sold out every term,” he said. “Students are showing tremendous interest once they are exposed to the areas of logistics and supply chain management. It is kind of [like] they don’t know what they don’t know.”

Part of the problem for many schools, said Ozment, is that transportation and logistics are not considered a critical part of overall business education.

Only 60 of 475 accredited collegiate business programs offer majors in transportation, logistics or supply chain management and less than 1% of current business school graduates earn logistics degrees, Ozment said.

Ozment said approximately $25 million is needed to fund new teaching positions nationwide but there is no consensus among school administrators about how to get the money.

One suggestion is to request funds as part of the federal highway reauthorization legislation. But Ozment said many people view that as a “bad idea” because it would subject funding to the political whims of lawmakers and would be hard to justify based on the current state of the federal budget.

Privately owned companies could be asked to provide funding, but Ozment questioned whether it would be fair to solicit financial support from one type of business when other disciplines are funded by the state.

“Why should logistics be singled out?” he asked.

Support from industry was critical to the launch of a Master of Supply Chain Management program at the University of Michigan in 2009, according to program manager Eric Olson.

“Industry plays a huge role,” Olson said. But “it took two or three years to get it through all the red tape.”

Companies that gave money and “intellectual capital” to the program included Arrow Electronics, Cardinal Health, Cisco Systems, Dell Inc., General Mills, Hallmark Cards, PepsiCo, Procter & Gamble Co., Ryder System, Target Corp. and W.W. Grainger.

Concern about the availability of people with supply chain management skills has been building for several years.

In 2007, the Supply Chain Council, an industry and academic consortium, commissioned a study of supply chain talent management strategies.

Researchers David Aquino and Lucie Draper found that companies with top-notch supply chains were five times more profitable on average than companies in the Standard & Poor’s 500 and that a shortage of trained supply chain management professionals exists “at all levels.”

“Organizations are crying out for a greater number of trained supply chain generalists who can become more specialized as needed,” Aquino and Draper said in the report.

Specifically, industry executives said they wanted to see university-trained job candidates who were better able to “connect the dots,” provide organizational leadership and “balance specific information technology skills with business acumen.”

In 2009, AMR Research conducted a survey of 126 major corporations and 19 schools with supply chain management programs to find out how well graduates were meeting the needs of industry.

“Unfortunately, most academic institutions are only partially meeting the most pressing needs from industry,” said Aquino, who conducted the study. Aquino now works as vice president of operations strategy and performance measurement at Houghton Mifflin Harcourt, a publisher of educational materials based in Boston.

Supply chain programs on average teach only five of 11 key subject areas, Aquino said. Those key subject areas are: plan; source; make; deliver; customer management; post-sales support; new product design and launch; strategy and change management; performance management and analytics; technology enablement; and governance.

The best schools in terms of value to companies and depth and scope of program offerings were Pennsylvania State University and Michigan State University, the survey found.

At Penn State, more than 800 students were enrolled in logistics programs with 29 full-time professors focused on supply chain management. Michigan State offers 39 supply chain courses and students must take an average of eight of them to graduate.

Massachusetts Institute of Technology and the University of Michigan had the highest average graduate base salaries at $116,000 and $100,000, respectively.

To boost the appeal of supply chain management as a career choice, schools are working more closely with employers to help refine program offerings and to reach out to high school students.

“We have a very close relationship with industry,” said Qing Hu, Supply Chain and Information Systems Department Chair at Iowa State University in Ames. Hu said ISU recently added three faculty members and is paying for it, in part, by charging higher tuition to students in the College of Business.

At Penn State, university and local education officials secured public funding for a supply chain management course to be taught at a local high school.

Bob Novack, an associate professor at Penn State, said the course may be the first of its kind in the country and that 40 students, including his son, who is a sophomore at State College High School, have signed up for the first class this fall.

“We haven’t found a comparable course anywhere,” Novack said. “We saw programs that were teaching kids basically how to work in a warehouse. We wanted to develop a course that was more college oriented.”

One program that does teach high school students job skills was set up by the Material Handling Education Foundation in Rock Hill, S.C., in 2009.

Funded in part by Don Frazier of Frazier Industrial Co., students at the Rock Hill Schools Applied Technology Center learn to perform tasks in a working warehouse using equipment and technology donated by company sponsors.

Programs similar to the Don Frazier Supply Chain Training Center are “in various stages of development” at 40 high schools and community colleges across the country, according to Allan Howie, director of continuing education and professional development for the Material Handling Industry of America in Charlotte, N.C.

The program also provides training for teachers.

“There is no teacher education program for warehouse skills,” Howie noted. “We have to create the teachers.”

At the University of North Florida in Jacksonville, school officials tapped corporate donations to open a logistics technology lab and to acquire software licenses from companies that help manufacturers and retailers manage shipping processes, such as i2 Technologies and Manhattan Associates, to give students a realistic work experience.

“We are responding to the need for highly skilled transportation and logistics professionals,” said Lynn Brown, associate director of transportation and logistics for UNF.

The school also sponsors career academies in area high schools to encourage students to pursue careers in transportation and logistics.

To help expand transportation and logistics programs, some industry officials say there is a need to develop new curriculum standards.

One such effort is being undertaken by the Supply Chain Talent Academic Initiative, a non-profit industry/academic consortium that is led by Mike Hadley, a materials management executive at Boeing Integrated Defense Systems in Mesa, Ariz.

“What we now call supply chain management grew out of functionally aligned curriculums,” Hadley said in an interview with Transport Topics.

“Some schools had logistics-based curriculums, others had purchasing and supply-management curriculums, and others had operations-based curriculums. Industry still needs these programs. However, industry also needs programs that develop supply chain integrators.”

SCTAI was launched in 2007 with the goal of “ensuring a pipeline of talent exists for supporting our mutual business interests,” according to the group’s social media website on LinkedIn.com.

Among the group’s objectives is to define and forecast the need for supply chain talent and to establish benchmarks for schools to evaluate educational programs.

“We are getting closer to agreeing on what needs to be taught,” said David Aquino, a member of SCTAI and co-author of the original study on supply chain talent for the Supply Chain Council. “It will be a standard of care that would be expected of all accredited supply chain programs.”

Hadley said the group is also looking to fund scholarships and is working with high school counselors to put supply chain management “on an equal footing with other professions and careers.”

There is often a “disconnect” between what schools teach and what industry needs, said Chris Clott, who heads up an undergraduate degree program in international business and logistics at the California Maritime Academy in the San Francisco Bay area.

“The interaction between logistics and information technology, for example, is very strong, but software changes,” Clott said. “We need people now that can interpret data.”

Clott said internships and travel abroad are two of the best ways to prepare students for jobs in supply chain management.

Verda Blythe, director of the Grainger Center for Supply Chain Management at the University of Wisconsin in Madison, Wis., said schools still face a challenge to educate students about supply chain management.

“It’s not what it was 10 years ago,” Wythe said. “We put a lot of emphasis on technology and integration of business processes.”

While demand for supply chain graduates has fallen off in some hard hit industry sectors like manufacturing and retail, Mary Pilotte, managing director of the Global Supply Chain Management Institute at Purdue University, said it is growing in new sectors, such as banking, health care and entertainment.

Also hiring, in response to difficulties caused by the economic downturn, are consulting firms, Pilotte said. “They smell blood in the water.”

Rex Beck, a former Verizon Logistics executive hired to teach at Riverside Community College in Norco, Calif., eight years ago, said most of his students are already working in local warehousing jobs and some, like Terry Campbell of U.S. Battery Manufacturing Co., have won promotions to top supply chain jobs after completing courses in logistics and supply chain management.

“They see how transportation and distribution is affected by purchasing or marketing activities,” Beck said. “These jobs were isolated to a greater degree than I thought. You don’t necessarily understand what goes on upstream or downstream. Same thing happens in transportation. If you grow up in it, you don’t know” about decisions that could affect what you do.