The fight for talent – Logistics Start-ups vs Established MNCs

Rise of Logistics Startups

In today’s tech-enabled world, just about anything can be ordered anywhere in the world from a smartphone. However, traditional supply chain and logistics services are yet to catch up. A shipment across continents requires multiple layers of providers, takes days and is often complicated to manage. This has provided a golden opportunity to a variety of startups, in Asia and worldwide, that have emerged to tackle the shortcomings. From intra-city delivery to on-demand storage and innovative web-based tools and platforms, startups are now catering to varied logistics needs for all kinds of businesses.

One of the most experienced companies in growing e-commerce startups – Rocket Internet – has focused a lot on growing their Lazada and Zalora e-commerce brands. And just this week, Alibaba announced it agreed to buy a US$1 billion controlling stake in Lazada. Moreover, this investment, together with US$250 million into SingPost, Singapore’s national postal service, means Alibaba is trying to get their foot in the door into the South East Asia e-commerce market.

Further looking at the start-up battleground we have a few remarkable players. Thailand’s aCommerce has had impressive growth. With offices and distribution centers in Thailand, Indonesia, and the Philippines and over 140 enterprise clients and 300 percent growth, things are looking up for them. The start-up is providing end-to-end services with a focus on e-commerce clients. They have raised over US$20 million in funding and arranging an offline-to-online shift after an investment and partnership deal with DKSH, a major Swiss company.

Another example of a fast-growing start-up, Singapore-based online grocery company RedMart is close to raising a massive $100 million Series C round. Their plan is to expand its service across Asia. They already secured over $50 million from investors like Garena, SoftBank Ventures Korea, Visionnaire Ventures, and Facebook co-founder Eduardo Saverin.

Big players in e-commerce are also busy with expanding their footprint. Infrastructure developments in the region are happening on the border of Hong Kong and China. Over 2 million square feet of e-commerce warehousing is being constructed, which nearly triples e-commerce logistics capacity in Hong Kong since 2014. TaoBao, JD.com, and others are driving the expansion as they continue to enable China’s consumer desire for genuine products and foreign-made brands in South China.

But it’s not just about e-commerce. There is a lot of excitement around the future for on-demand platforms like Uber or Grab. Uber CEO Travis Kalanick announced the company will eye logistics as its next frontier “We’re in the business, today, of delivering cars in five minutes. But once you’re delivering cars in five minutes, there’s a lot of things you can deliver in five minutes.”

So “Uber for logistics” is well on the way. In Asia, however, where the logistics industry remains less sophisticated than that of the US or western Europe, this wave is already happening. Companies offering logistics-on-demand face growing demand by the day. It’s more important to get things done than have a great plan. By doing without fancy black cars in favor of white vans and trucks, Lalamove, Ninja Van and Gogovan have beaten Uber.

Who will get the best talent: Startups or Established supply chain organizations?

With the startup wave rising, the logistics industry is witnessing employee movement, especially in mid- to senior-level, from established 3PLs or Supply chain organizations to new-age ventures. Employees are moving to startups mainly because of the exciting work culture, sometimes even substantial pay rise and significantly larger roles. All of the above can be clearly attributed to “meaningful aspirations” employees have today from their work and workplaces. Startups are also wooing employees with stock options. This allows them to engage employees for the long term. Candidates view this as an attractive opportunity with the potential of cashing-in when a company is bought over or announces its IPO.

Additionally, established start-ups are easily able to attract talent thanks to their appealing employer brand. Top young candidates would be reluctant to go join an established 3PL or supply chain organization because of its perceived conservative culture. However, the same candidates would probably jump at the opportunity to work at Uber, Amazon, Grab or why not Red Mart.

Working as a senior executive in an MNC means making a high salary, maybe driving a sports car, using a corporate card and other perks. So why would anyone give that up to take a pay cut, network with programmers and give up the fancy corner office for a desk at a coworking space?

The answer is –?to change the world!

A 2011 report commissioned by the Career Advisory Board and conducted by Harris Interactive, found that the No. 1 factor that young adults ages 21 to 31 wanted in a successful career was a sense of meaning. The Google Careers homepage sums it up in their simple yet bold headline: “Do cool things that matter.”

As a great example, RedMart managed to hire ex-eBay marketing director Todd Kurie last year. Take Lazada and Zalora’s management teams, who are made up almost exclusively of finance professionals, ex McKinsey and other high flying individuals who are leaving their corporate careers behind for the technology industry.

This has been the trend at Rocket Internet companies, as portrayed by an ex-employee: “Everyone was coming from a banking or consulting background. Rocket Internet CEO asked himself where he could find the biggest overachievers. He knew that type came from Goldman, McKinsey and other consultant firms. They had the pedigree that made it easier for him to raise money – every investor respected these employees because they had the same background.”

So should established 3PLs and Supply Chain organizations be concerned?

Yes! Absolutely!

Given that top-tier people with such a broad profile are hard to find. A recent survey of 400 executives of multinational companies by Deloitte found that 71% have difficulty recruiting senior leadership for their companies’ supply chains; 74% said they would need strategic thinking and problem-solving skills in their supply chain managers, but less than half said their companies are good at it now.

Companies that don’t invest in hiring or cultivating talent now will suffer greatly 3 years down the road. This coupled with the fact that the top young graduates will continue to prefer joining a Uber or Amazon rather than a brand perceived as traditional, will spark serious trouble for a lot of companies.

As I have written before, the investment needs to be done in employer branding and building a talent pipeline . But even beyond these two points, established organizations need to walk the talk!

And their senior management needs to move beyond hierarchical and usually slow decision making and too much faster ability to respond to market conditions. And give these high flyers and overachiever profiles enough scope to make an impact. Fast!

Moreover, companies should consider injecting new blood from outside the traditional industry into their executive teams, to be catalysts for these changes. Because at the moment, the picture is not very rosy. And most established organizations failing to adapt fast enough. And this is something we are hearing again and again from our C-level candidates themselves!

Innovation is the key!

For example, an obvious question, looking at the 3PL organizations: why is there none of them implementing their own GoGoVan or UBER? When these startups were small, they could have even been an acquisition target. Though time is not lost, with more start-ups coming and growing aggressively. However, courage and the ability to take tough decisions are required.

And don’t get me wrong, there are some companies which can be shared as positive examples.?XPO ?is probably one of the more aggressive and progressive out there, having allocated $400 million annual investment in technology worldwide to drive innovation.

Also, take DHL, they were the first and fastest to create the e-commerce business in response to market conditions. And subsequently, SingPost and their logistics arm,?Quantium Solutions , actually built on DHL strategy, attracting their top senior management and then establishing themselves as key players in e-commerce themselves. Not to mention they also were quick to name at that point in time two key partners of McKinsey, Wolfgang Baier and Sascha Hower, as CEO respectively COO, to drive the change.

Conclusions

The market today is more dynamic and moves faster than anything we have seen ever before. Supply chain and logistics are obvious catalysts for productivity and cost improvement and are the prone target of these fast changes.

Hence, in order to stay relevant and keep attracting top talent, the key questions senior executives of established organizations should ask themselves are:

• How can we speed up our decision-making process?
• How can we attract and give freedom to take decisions to our top talent?
• How can we leverage our top performers to reinvent our business?

Established organizations need to pay attention to the fast pace of change that happens in the industry – from start-ups to new technology. And try to keep up! The more nimble you are, the faster you will adapt.

Source: The fight for talent – Logistics Start-ups vs Established MNCs by Alcott Global