Suppliers, This Message Is for You

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A five-step model for workforce planning

Suppliers, before you read any further, I need you to do some self-introspection by answering yes or no to this question: Are you paying attention?

Supply and Demand

Now let me clarify. Often, I present a topic called “Demand” at ASQ and APICS meetings. At one of those meetings, a member said to me that he is “very concerned about his suppliers not paying attention to the demand because it’s a break-or-make situation for his company.”

In a previous Quality Digest Daily article, I wrote about the need for companies to mine their existing workforce for economic sustainability and increased market share. Suppliers, are you paying attention to workforce planning to help identify gaps in certain jobs and geographies? That’s a big part of your supply chain demographics.

Supply chain professionals are experts in managing functions such as transportation, warehousing, inventory management, and production training. But what about managing the workforce?

In the past, the supply chain leader’s role mainly focused on shipping routes and distribution. These days progressive companies consider how the supply chain plays a strategic role in total costs—including how the workforce is managed.

Are you paying attention now?

I’d like to present a model for workforce planning. It can be used to identify emerging skills gaps, whether they arise from turnover or changes in the external environment. This model will help you maintain a well-structured workforce of an appropriate size to meet your company’s changing needs in a cost-efficient manner.

The model requires that you work closely with your human resources department to gather data on workforce skills, knowledge, and abilities (SKAs), often called “competencies.” I suggest you and the human resources rep first identify subject matter experts and define their SKAs, then mine data similarly from the rest of the workforce.

With workforce planning, you and human resources will be able to measure and compare your current workforce (supply) with your future workforce (demand) by:
• Identifying the SKAs the company requires to achieve its intended business goals
• Linking human resources strategies with your business objectives
• Being realistic in your budget processes
• Delivering the goods and service required by your vendors
• Identifying potential problems and managing risk
• Developing workforce skills that take time to grow
• Taking account of regional structures
• Optimizing the use of human, financial, and other resources

You must manage your total supply chain using a combination of advanced software solutions, business acumen, and analytical skills to ensure customer quality and meet delivery needs. Likewise, your workforce plan should specify what must be done with the workforce to meet your company’s and customers’ demands.

Following are five steps you should include in your workforce planning model.

Step 1: Analyze demand

This step is about knowing the answers to the following questions:
• What new or changed goods or services do you foresee in the short term, as defined by you, and in the long term, also defined by you?
• How will your company be structured for tomorrow’s business?
• What SKAs will you require to carry out your future work functions?
• What technology or reengineering could be used to improve your goods or services supply chain?

Step 2: Analyze supply

This step is about knowing the SKA of your current workforce, as indicated from primary sources such as:
• Human resources management system
• Job descriptions
• Skills databases
• Interviews
• Surveys
• Focus groups and workshops

You will also want to know the answers to the following questions:
• What jobs now exist?
• How many people are working in a particular area?
• How essential is each job?
• Are there jobs that are no longer needed?
• What is the use of temporary vs. permanent staff?

Human resources managers should develop a database, if they haven’t already done so, detailing each job in each area, including the job holder’s:
• Professional qualifications and relevant training
• Key experience across functional areas
• Key competencies

Step 3: Conduct a gap analysis

This step is about comparing your current workforce supply to your workforce demand, and identifying gaps, whether they are deficits or surpluses. A workforce gap arises wherever the proficiency in level, skills, experience, and/or education isn’t being met by any employee or segment of the workforce. By identifying these critical gaps, you’re seeking to ensure that your company will supply the resources to fill it.

The identified gaps between supply and demand will become your roadmap for your organization’s workforce action plan. You should prioritize filling the gaps that are critical to delivering your customers’ requirements.

Gaps in a workforce can be defined in terms of specific level, skills, experience, and education, as follows:
• Level: executive, management, exempt, nonexempt
• Skills: professional qualifications, knowledge, abilities, competencies
• Experience: HR, IT, industrial relations, finance, communication, project management, procurement
• Education: technical, professional, leadership

Step 4: Create a workforce action plan

You and your HR department should create a workforce action plan based on the information collected from the gap analysis, and from discussions with managers in each department. All the information will help you determine the strategies that can be used to eliminate the gaps. By the time you get to that point, you’ll have a clear picture of the issues and challenges, categorized by division and functional areas, that your company is facing.

These questions will help you formulate your workforce action plan:
• What are the three most critical workforce challenges facing your company?
• What are the most common themes that emerged from your discussion with managers?
• What will be the effect on the company if these challenges aren’t addressed?
• What actions, if any, are already underway to address these challenges?
• Is there enough time to develop the existing workforce to meet anticipated vacancies or new skill sets, or is external recruitment the best approach?
• Does your company have a policy of succession planning?
• Does the existing workforce demonstrate the potential or interest to develop new skills and assume new or modified positions?
• What labor market competition exists for future skills?
• Do current job descriptions reflect future competencies?
• Should some divisions or sections be reorganized to meet business needs and strategic objectives?
• What are the recommended strategies that the organization can apply to address these challenges?
• What financial resources will be required to carry out these strategies?

Typically, the HR department is the primary recipient of the workforce planning output and is usually, though not exclusively, responsible for executing the action plan. However, you must continue to stay involved.

HR managers should explore the full range of options when seeking to fill any skill gaps that have been identified. The options to consider include:
• Upskill your existing workforce to bridge the skills gaps
• Identify SMEs for training others
• Restructure the workforce to optimize skills sets
• Outsource a function
• Target and promote recruitment

Step 5: Implement and evaluate

You and your HR department must monitor the progress of the action plan. It’s necessary to check that milestones have been reached, and to adjust the plan where necessary for success.

Here are some important questions to ask during the evaluation process:
• Has the business plan changed since the beginning of your workforce planning efforts? If so, what are the implications for the strategies implemented?
• Have the implemented strategies achieved the intended results?
• What was the cost/benefit of implementing the solutions?
• To what extent were the demand and supply projections accurate?

Are you paying attention now?

This article was first published by on 8/24/2015.