Volume 19, Number 2 Article by Janat Shah June, 2007
Supply Chain Issues in Knowledge-based Service Industries: Discussion :
Knowledge-based services represent the largest and fastest growing sector of economies world wide and human resources are important assets in knowledge-based firms. However, traditional manpower planning models do not seem to capture the key characteristics of the knowledge-based service industry, and the human resource planning issues for this industry demand special attention. IIMB Management Review invited a panel of practitioners and academics to discuss the issues surrounding the designing of optimal supply chains in services and developing appropriate contract mechanisms to help service firms align performance across service supply chains.
According to Jeby Cherian, Director, Global Business Solutions Centre, IBM India, managing the services supply chain in a globally integrated enterprise (as opposed to an MNC) demands specific strategies to meet the challenges of the movement from local to global sourcing of talent, the intense competition which has shifted the negotiating leverage from the employer to the employee, building teams with the right skill sets across multiple dimensions and multiple locations, and the complexity of bringing all the stakeholders to deliver on time. IBM’s ‘Professional Marketplace’, a multi-dimensional cadence process, a tool that standardises the approach to categorise each of the company’s resources, is an attempt to meet the challenges in this area.
For Rajiv Dhawan, Senior Marketing Manager, Aker Kvaerner Powergas, an engineering consultancy company, the manpower challenge lies in getting people who would like to pursue a career in design in preference to management or IT or manufacturing. In planning capacity, Aker Kvaerner use the Go/Get methodology, where based on the project ‘going’ ahead and the company ‘getting’ it, they make estimates of capacity for a twelve-month period. The forecasting of HR requirements depends on the kind of project and the range of services that would entail, and the company’s prospects of growth; in managing bench Aker Kvaerner prefers the task force approach to the discipline-wise approach, particularly in very large projects.
The ‘people supply chain’ can influence the key operating parameters of an organisation, according to Pratik Kumar, Executive Vice President — Human Resources, Wipro. Companies that can crack the supply chain equation, getting the supply side factors of lateral hiring, fresher hiring and redeployment to balance with the demand side requirements, and manage the resultant challenges of demand fulfilment, utilisation management, bulge management and talent transformation, will be the ones who will continue to remain ahead of the curve and do well. The levers to help solve the equation are a very strong prediction model on the demand side and proactive sourcing on the supply side. Active analytics to track the metrics and sound ground rules with regard to bench and other aspects, complete the equation.
Adaptability is the new mantra in today’s business environment and operational excellence holds the key, in the opinion of Rakesh Rajora, Vice President, Accenture. Operational excellence is applicable to the entire ‘Buy- Make- Sell’ value chain, that is to supply, demand and manufacturing. Companies like Accenture build their operations around the four vectors of cost, quality, delivery and service. On the ‘cost’ vector of the supply chain, the biggest challenge lies in the erosion of the contribution margin with variable costs creeping up. ‘Delivery’ too must transcend its traditional dimensions and accommodate the third party and the customer’s environment. In illustrating the efficacy of operational excellence tools in supply chain management, Rakesh Rajora quoted instances of Poka Yoke tools used successfully in data entry to bring in savings worth millions of dollars, and how good metrics applied to communications initiated improvement.
Among the strategic challenges facing the knowledge enabled service industry, Dr P Balasubramanian, Founder and CEO, Theme Work Analytics, highlighted the need to manage issues around the critical dimension of HR such as continuous addition to the skill sets of the staff, HR supply and career planning; market segmentation; and demand forecasting. Both market segments and demand forecasting have to be organised in terms of the three dimensions of technology, geography and verticals. The customer facing side of the organisation has to be synchronised with its internal structure geared for supply chain excellence. Demand management is tied up with effective bench management strategy. The secret lies in building domain skills for staff on bench so that over a period of time the deployment probability of a resource is significantly enhanced. The operational and strategic effectiveness of firms depends on having integrated models, processes and systems for HR.
The discussion that followed the presentations threw up several related issues. On the forecasting and capacity planning side, attrition, uncertainty of prospects, accuracy swings between build ups and ramp downs, the need to balance hiring from outside and growing one’s own resources, the debatable quality of available resources and the lack of control over variables, emerged as major. Compounding the confusion was the multiplicity of metrics when what was necessary was to identify and measure the essentials. Takeaways from manufacturing could be useful in this area. When it came to organising resources the questions that were debated were whether to dedicate resources and if so to what extent, specialisation vs multi-skilling, bulge management, how to deal with 25% bench which seems to have become the norm in IT – a legacy of lumpy recruitment and aggregate-level forecasting, how companies create and manage an internal market for their resources and what their processes of selection are. The IT industry with its high growth, diversity of skill and demand and geographical spread may require a different model to manage demand, and industry-academia co-operation may be an important way forward in managing supply.
Reprint No 07208
