MHI Solutions Improving Supply Chain Performance
The digital transformation of supply chains promises to supercharge performance, improve efficiency and resilience, slash operating costs, increase customer satisfaction and boost sustainability efforts. However, a persistent shortage of workers with the right skillsets has become a major roadblock to realizing these much‑ballyhooed benefits. It’s time, experts say, to focus on the people side of the human‑tech equation.
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Rick McDonald, recently retired chief supply chain officer (CSCO) at Clorox, remembers the days when finding workers to fill job openings—workers with technical skills who would stick with the company for a while—was as easy as walking out the front door of your manufacturing plant.
“You could look to your left and right, and there were people who had worked in somebody else’s plant, or they had worked on a farm, or they were a shade tree mechanic, or they did HVAC repair, or they were a diesel mechanic,” the 32‑year Clorox veteran said. “There were a lot of those people around.”
McDonald isn’t the only CSCO nostalgic for simpler times. Talent shortages have become endemic for enterprises globally, a perennial issue cited in survey after survey of industry leaders, including the 2025 MHI Annual Industry Report, which identified talent as the second‑leading supply chain challenge after economic uncertainty/inflation.
But what has been a top concern for years is taking on new urgency as organizations across the spectrum push to adopt artificial intelligence (AI) and other new digital tools that promise to transform their operations and produce world‑beating business results. They just can’t find the talent to make it happen.
In PwC’s 2024 Digital Trends in Operations Survey, 69% of operations and supply chain officers said their digital investments fell short of expectations, citing “people capabilities” and “program leadership” as top factors, and 39% called lack of skilled digital talent the biggest challenge to digital transformation.
Those sentiments echo the results of a 2022 survey by McKinsey showing that, while 89% of large companies had undertaken digital transformation projects, those initiatives had reaped a disappointing 31% of expected revenue gains and only 25% of projected cost savings.
Supply chain experts say the underwhelming results delivered to date should serve as a caution flag prompting companies racing toward digitization to pump the brakes and refocus on the critical human elements that—so far, at least—have been lacking in many digital transformation initiatives.
Those include creating a culture that allows employers to attract and retain talent, understanding how to roll out new technology in a way that empowers rather than overwhelms workers, and providing the upskilling and reskilling needed to help workers maximize the new tech tools being introduced.
“CSCOs and supply chain leaders must prioritize people, their unique talents and abilities, with the mindset and motivation that humans are amplifiers of supply chain’s digital and physical assets,” said Danielle Torgerson, senior principal analyst for Gartner Supply Chain. “Rather than focusing on the technology investment, organizations need to put people first and develop plans that are user‑ or people‑centric.”
Multiple Factors in Play
While finding enough workers to fill open positions has been a pain point for years, new forces that have come into play over the past few years have exacerbated the imbalance in labor market supply and demand, including:
- Reshoring and efforts to boost U.S. production of EV batteries, semiconductors and other critical technology will create an estimated 3.8 million manufacturing jobs through 2033, but half could go unfilled, according to the 2024 Talent Study by Deloitte and The Manufacturing Institute (TMI).
- Retiring Baby Boomers and the unexpected exodus from the workforce of millions of older workers during COVID‑19 have created unprecedented challenges in filling open jobs. Recent data show there were 8 million job openings in the U.S. but only 6.8 million unemployed workers.
- Pressure on supply chains to do more, better, faster has ratcheted up as e‑commerce continues to explode. U.S. consumers spent $300 billion online in the third quarter of 2024—16.2% of all retail sales and approaching the pandemic peak in 2020.
- The skillsets required to operate and manage digital supply chains pit organizations against tech giants like Apple and Google in the competition for talent—not a fair fight, some say, given the perception of traditional manufacturing and supply chain jobs as dark, dirty, dangerous and dull.
Skills Gaps at All Levels
Those are a few reasons why attracting and retaining talent was cited as the primary business challenge by more than 65% of respondents in a 2024 outlook survey by the National Association of Manufacturers (NAM). For companies pursuing digital initiatives, the skills gaps are across the board and at all levels.
The Deloitte/TMI study found not only that industry growth is driving demand for more workers of every type, from entry‑level associates to skilled production workers to engineers, but skill requirements are evolving, and needs are spread between technical manufacturing skills, digital skills and soft skills.
A 2024 survey by Descartes Systems Group found high‑performing supply chain and logistics operations now not only require a full complement of laborers but also a growing number of knowledge workers such as supply and demand planners and analysts as operations become digitized and more technical.
Open positions for knowledge workers were the hardest positions to fill, followed closely by managers. U.S. companies included in the survey felt the talent pinch the most, with more than one in three indicating that filling knowledge worker roles and manager roles was “very to extremely hard.”
Gartner’s Torgerson said trends identified by the firm’s supply chain research and advisory practice suggest a combination of supply chain domain expertise, technical skills and adaptability are critical for companies seeking to implement or progress on supply chain digital transformation.
“Based on our own research and client interactions, proficiencies in technology and advanced analytics, data science and data literacy are in demand,” Torgerson said.
Soft Skills Are in Demand, Too
It’s not just the hard, technical skills companies can’t find in today’s applicant pool: Soft skills such as communication and relationship‑building abilities are in short supply and are becoming more important than ever for companies as they help their employees navigate the transformation in the way they work.
Back when he started his 25‑year career in supply chain recruiting, Rodney Apple recalls, soft skills were in abundance and hard skills were lacking. The hardest jobs to fill were for demand planners, data analysts, network optimization specialists and related junior‑level supply chain roles.
The inverse situation exists today, with entry‑ to junior‑level roles easier to fill as university supply chain programs turn out graduates who grew up in a digital world and are “more naturally gifted in the technical and hard skills” than in soft skills, said Apple, founder and CEO of SCM Talent Group.
That trend is creating challenges as Baby Boomers retire from senior roles and mid‑level managers move up. Apple spoke recently to the head of procurement for a $20 billion company struggling to find mid‑level leadership candidates with the soft skills to drive transformational change within their organization.
“I hear that consistently from the chief supply chain officers we talk to,” Apple said. “It’s not the roles that report to them, it’s not the feeder roles that people come into. There’s just a vacuum there in the middle.”
Recent MHI Annual Industry Report research has also identified a growing demand for soft skills, according to Dr. Randy Bradley, associate professor of supply chain and information systems management at the University of Tennessee’s Haslam College of Business.
Bradley and the faculty have evolved the supply chain management program at UT‑Knoxville to put a greater emphasis on those skills so that their students can enter the workforce and contribute immediately with a broad base of knowledge in supply chain technology and analytics and an ability to communicate effectively at multiple levels of an organization.
CSCOs are also concerned about an emerging gap in plant‑level managers who not only lack soft skills but don’t have operations management experience—a byproduct of so many early‑stage supply chain practitioners pursuing career paths in analytics and technology instead of operations, Apple said.
People‑First Approach
MHI’s 2025 survey of supply chain leaders confirmed robust interest in new technology, with 55% planning to increase investments in technology over the next five years including AI, blockchain and distributed ledger technologies, cloud computing, sensors and automatic identification, autonomous vehicles and drones and robotics and automation.
Companies are upgrading from legacy planning tools to new AI‑enabled enterprise resource planning (ERP) systems and transportation management systems (TMS). Half of those surveyed are adding new digital capabilities to help them meet sustainability and other corporate responsibility goals.
The top reasons they give for incorporating new supply chain technology with human‑managed activity: enabling decision‑making and visibility into data (44%), improving long‑term resiliency and sustainability (42%), boosting operational efficiency and optimization (40%) and empowering workers (39%).
Yet fewer than one‑third of companies in PwC’s 2024 Digital Trends in Operations Survey said evolving their workforce was among their top priorities. That’s a common failing of technology initiatives, said McDonald, who led a major digital transformation for Clorox before retiring as CSCO in September 2024.
“Almost everybody wants to start with and only focus on the tools because it’s the shiny new thing you spent a lot of money on,” McDonald said. “And they don’t attend to the leadership mindset that’s required, the digital fluency of those leaders and then how they will go about upskilling and reskilling the people who actually make those tools do what they’re supposed to do.”
McDonald preaches a “mindset‑skill‑set‑toolset” approach that keeps employees front and center in the transition to new technology. That was a lesson he learned the hard way when Clorox realized it was behind the curve on supply chain capabilities and invested in new Demand and Supply Planning and TMS platforms.
Selecting the new planning tool was complex and challenging. The company decided to invest in a planning tool that included a demand‑sensing AI module. When the time came to roll out the technology, however, McDonald said, it became clear that “people were not running through the halls of Clorox singing, ‘Hallelujah, here we go!’”
Employees’ reactions ran the gamut from excited early adopters to those who stubbornly resisted change. Ultimately, the company realized it needed outside help, hiring Mercer to develop a change management strategy to communicate the benefits of the overall digital transformation and the new planning tool to manage their associates through the change curve.
Said McDonald: “We wanted to eliminate fear and we wanted to get them excited about the changes. We wanted to let them know we were going to help them be able to use these tools through some upskilling and reskilling, and we weren’t just going to throw it at them and say good luck.”
The effort “largely worked,” said McDonald, and while he concedes the company had to “pry Excel spreadsheets out of some of the planners’ hands,” most employees were either positive or at least neutral on the adoption of the new planning tool by the time the campaign concluded.
Clorox’s digital transformation had a happy ending despite the initial misstep, but McDonald is convinced the disappointing ROI many companies have seen with their own digital initiatives has a lot to do with executives taking their eye off the ball and forgetting about the people side of the human‑tech equation.
“A lot of that is because change management is so undervalued and as a result, underinvested,” McDonald said. “I’ve seen it firsthand, and when I talk to other leaders, other CSCOs, I hear the same thing. There’s just this lack of awareness or understanding of how important that change management piece is.”
Indeed, a Harvard Business Review study includes change management among six core capabilities of companies leading the charge on digital transformation, citing its critical role in ensuring that “digital solutions are adopted and can scale by making them easy to use and reuse across the enterprise.”