Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
Once regarded as a souless back-office function, supply chain management has emerged as one of the hottest fields in American busi- ness. Thought leaders and industry gurus point to the supply chain as a pow- erful competitive differentiator, while corporate titans like Wal-Mart, Dell, and Toyota brandish their supply chain capabilities like swords. Given the climate of the times, it's no wonder the executive suite has finally woken up to the value of the supply chain.
For evidence of the profession's growing stature, you need look no farther than DC VELOCITY's 2007 Salary Survey. The median salary for the 876 survey respon- dents was $90,000, with the mode (or most frequent response) being $100,000.
The mean or average salary came in even higher at $140,533. This number, however, may be skewed by the 11 people who reported earning over $1 million. All of these millionaires were senior vice presidents, corporate officers, or presidents at companies with more than 5,000 employees.
Given DC VELOCITY's diverse readership, it's no surprise the responses ran the gamut, ranging from over $4 million to $23,000. But there were plenty of responses that fell between these two extremes—a little more than half of all respondents earn between $75,000 and $149,000.
Logistics and supply chain professionals' salaries appear to be on a par with those of their peers in other parts of the organization. Purchasing professionals, for example, earn $78,470 a year, according to a recent survey by the Institute for Supply Management (a similar survey conducted by Purchasing magazine put the number at $83,205). IT professionals and accountants earn salaries in that range as well. Janco Associates Inc.'s 2007 IT Salary Survey reports a median salary of $78,652 for IT professionals. The Institute of Management Accountants' 2005 salary survey put its members' median salary at $91,823.
DC VELOCITY readers also indicated that their salaries have, for the most part, increased from last year, although not significantly. According to the results, 78 percent of survey respondents saw their salary increase. (Another 17 percent say their salary remained the same, and 5 percent say it decreased.) Of that 78 percent, however, 66 percent say that their salary increased by 5 percent or less.
Other signs of respect
Salary size is not the only indicator of logistics and supply chain management's growing stature. Some 69 percent of respondents say that over the past three years, the number of functions that they manage has increased, while only 5 percent say it has decreased. The remaining 26 percent say there has been no change.
Furthermore, 54 percent report that they have direct or indirect management control or influence over the typically broad and strategic area of supply chain management. With this broad reach comes more money. The survey results show that those who have control or influence over supply chain management earned more than those who did not. Those in supply chain management had a median salary of $100,000 and an average salary of $183,026. Those not involved in supply chain management had a median salary of $80,000 and an average salary of $90,197.
That's not to say that DC VELOCITY readers have abandoned their traditional distribution focus; 61 percent of readers have influence or control over logistics management, and 69 percent have influence or control over warehouse/distribution center management.
Of course, what they're called has a lot to do with what respondents earn as well. Exhibit 1 shows median and average salaries salary by number of years at companyby title. As the table illustrates, when it comes to median salaries, the average senior vice president earns more than 2.5 times the salary of the average supervisor.
Does experience count?
The fast-changing nature of supply chain management—and the information technology that supports it—would seem to favor younger managers. The survey results, however, indicate that the picture is slightly more complex.
If you look at median salary by age (see Exhibit 2), the results indicate that after 45, the median salary increases only gradually with age. (There does seem to be a leap in salary after the age of 60, but the sample size for this group is small, with only 38 respondents.) Even this slight age advantage disappears if you adjust for title. Exhibit 2 also shows the median salary for managers (who represent the largest group of respondents). As the table shows, there's little correlation between the age of a manager and median pay. Likewise companies seem to value an employee's experience in a logistics-related job only up to a point. After 15 years of experience in logistics-related jobs, median salaries rise only slightly for all respondents and actually drop for those whose title is manager (see Exhibit 3).
However, if you look at average salary, it's a different story. Across all titles, average salary grows significantly as the age of the respondents goes up. The significant difference between median and average salaries after the age of 56 indicates that there may be a few people in these age groups in high-level positions who are earning very large salaries. In fact, nine of the top 10 earners are over the age of 56 and all are over the age of 45. This discrepancy is not seen with managers. Just as with the median salaries, average salary drops after age 45, until respondents reach the age of 60, when the average rises to $93,182. (The sample size for this age category, however, is only 11 respondents.)
Average salaries for all respondents also continue to grow substantially as the employee's number of years in logistics increases. Again of the top 10 earners, all had more than 15 years of experience. Salaries for managers also rose steadily until they reached around 20 years of experience. Then the rate of increase levels out, rising only 1.2 percent from the average for those with 16-20 years of experience to the average for those with more than 25 years of experience.
In short, title is much more important than experience when it comes to salary. However, a high percentage of those perched on the top rungs of the corporate ladder are in their 50s and early 60s and have over 15 years of experience in logistics. This result implies that experience is a factor in who gets promoted or hired to those highly compensated upper management positions.
What about number of years at the current company? The survey results showed no clear connection between loyalty to the company and salary. Across all titles, average salary rises steadily as the years of service at the company increase—or at least up to 25 years (see Exhibit 4). Median salary, however, shows no predictable pattern, with salaries rising for the first 15 years of service, holding steady from years 16-20, then jumping up at year 21, only to fall back down again after 25 years of service. Similarly, there seems to be no clear correlation between number of years of service at the current company and the average or median salaries for managers.
What accounts for higher pay?
We also took a look at some other key factors with the potential to affect pay—education level, location, size of the company, and gender—to see how they correlated with salary. The clearest results are for education level. As the level of education increases, so do the average and median levels of pay (see Exhibit 5). Interestingly, even those readers whose education ended with a high school diploma (26 percent of all survey respondents) are still earning high salaries, with a median salary of $72,000 and an average salary of $86,597.
Working in New England can also bump up the pay you receive. Based on both median and average salary, DC VELOCITY readers in New England earn more, on average, than their peers in other regions of the continental United States (see Exhibit 6). This proves true even if you hold the position constant, as is seen by looking at the median or average salaries for managers. In most other regions of the continental United States—the West, Middle Atlantic, South, and Midwest— salaries remained pretty much consistent, although average salaries in the Southeast lagged slightly behind the rest.
Size of company can also have an impact on pay. Average and median salaries generally tended to rise by number of total employees both for all respondents and for managers (Exhibit 7). The one exception is companies with 501-1,000 employees, where median salaries for managers dipped.
A look at the results broken down by gender yielded some interesting findings (see Exhibit 8). Women make up roughly 10 percent of all survey respondents; yet they earned five of the top 10 salaries reported in the survey. As a result, when you look at average salary, women seem to be earning significantly more than men— $303,695 vs. $112,691. Median salary, however, tends to be less susceptible to outliers. These figures show women earning significantly less than men—$70,000 vs. $91,500. In fact, if you look only at the manager level, it's clear that the average female manager doesn't earn as much as her male counterpart. Female managers earn a median salary of $60,000 and an average salary of $65,774, while male managers earn a median salary of $75,104 and an average salary of $80,225.
No matter what your gender, education level, location, or level of experience, one thing remains consistent: Logistics is a lucrative field. And as recognition of the strategic role of logistics and the supply chain grows, compensation is likely to follow suit.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
Chinese supply chain service provider JD Logistics today announced plans to double its overseas warehouse space by the end of 2025 as part of the company’s broader global supply chain strategy to meet the growing demand for cross-border logistics solutions.
As part of that effort, the company will also expand its network of bonded and direct-mail warehouses. That would mark a significant expansion since JD Logistics—which is the logistics arm of JD.com and is also known as “JingDong Logistics”—currently operates nearly 100 bonded, direct mail, and overseas warehouses. Those facilities total about 10 million square feet in markets such as the U.S., Germany, the Netherlands, France, the U.K., Vietnam, the UAE, Australia, and Malaysia.
Specifically, JD Logistics said it is focused on expanding its presence in Europe and the U.S., establishing collaborative supply chain networks capable of delivering fulfillment services within 24 hours in several regions. In support of that, the company plans to increase its international cargo flights from China to destinations such as Malaysia, South Korea, Vietnam, the U.S., and Europe to enhance cross-border transportation services. It will also explore the development of self-operated transportation and delivery capabilities overseas.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
The clean energy transition continuing to sweep the globe will give companies in every sector the choice to either be disrupted or to capitalize on new opportunities, a sustainability expert from Deloitte said in a session today at a conference in Orlando held by the enterprise resource planning (ERP) firm IFS.
While corporate chief sustainability officers (CSOs) are likely already tracking those impacts, the truth is that they will actually affect every aspect of operations regardless of people’s role in a business, said John O’Brien, managing director of Deloitte’s sustainability and climate practice.
For example, regulatory requirements on carbon emissions are expanding in every region, which means that even if a specific company doesn’t have to change its own practices, it will almost definitely need to flex to accommodate its partners and suppliers as they track scope 3 emissions or supply chain practices.
Likewise, companies are starting to challenge the classic concept of “force majeure” events than can cancel service providers’ contractual duties due to unforeseeable weather events. As the new argument goes, extreme weather patterns increasingly occur in accordance with climate scientists’ forecasts, so those hurricanes and wildfires are in fact foreseeable after all.
But one strategy for coping with the cost of those changes is to mine the power of the data that most companies will soon need to collect as part of their evolution. Instead of simply tracking its trucks to trim their routes and emissions, a transportation company could use the same data to manage their maintenance and fuel consumption.
“The climate management transition is going to be a massive disruption, but with that comes massive opportunity,” O’Brien said from the keynote stage at the “IFS Unleashed” show. “Don’t waste compliance efforts just on compliance, use it to create new value. You’re collecting all that new data, so use it!”
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.