Using supply chain principles to deploy employee talent
When IBM reinvented its supply chain in 2002, the driving force behind the decision was to harness the supply chain for a competitive advantage and enable IBM to become the most adaptive and responsive supply chain in the industry. The result accomplished much more by inventing a new on-demand supply chain that integrates end-to-end across the entire company with 45,000 partners, 33,000 suppliers and thousands of clients. As this supply chain transformation occurred, the IBM Company itself evolved as well to new market realities that witnessed tremendous growth in services and consulting engagements.
With these simultaneous transformations it was quickly realized that IBM's supply chain of the future needed to go beyond the management of assets to being able to synchronize supply and demand across all of IBM. The company is now applying its knowledge in orchestrating parts, supplies and products in its supply chain to the strategic goal of deploying human experts and intellectual capital with greater dexterity. The goal: To allocate people resources with the precision and coordination that is already done with physical goods.
Getting Down to Business
The employees that make up an organization are its most vital and valuable asset. When you look closely at the talents and skills of a diverse, global organization you end up with a knowledge base that, if harnessed correctly, can bring a significant competitive advantage. IBM's approach to harnessing the knowledge of its 330,000 employees is based on the same supply chain best practices that were used to run its hardware business. Fundamentally, it's an ecosystem for talent with the objective of getting the right skills to the right place at the right time and do it all in a faster, more efficient way.
This is innovative and a completely different approach, but it is incredibly significant. Today, more than ever before, the distribution of work is becoming more virtualized performed anywhere, at any time. And the real opportunity is for companies to enable new and more efficient ways to manage employee workflow in today's hyper-competitive, virtualized global business environment.
Many large organizations already employ some variation of talent ecosystem or skills database, using e-mail and phone calls and spreadsheets managed by project managers. This may work in small groups, but once it's properly populated using a regimented taxonomy the practice creates a single, common view of company's entire knowledge base that can instantly pinpoint the right employee for any given client opportunity.
The airline industry is a good example of this strategy in practice today. In addition to assets such as planes, fuel and passenger luggage, airlines have to assemble teams of pilots, flight attendants, security guards and maintenance personnel and get them to the right place within very short windows of time. Each employee serves a role that is critical to the success of the flight. For example, you wouldn't want two recent pilot graduates on the same flight from New York to Tokyo. Another good example is the way in which military personnel are deployed.
How to Get Started
Like any large-scale implementation, this demands a top-down approach with a disciplined strategy to match work demands with talent resources.
It sounds rational in theory, but in practice it has its challenges. For example, companies typically don't use the same taxonomy or terminology to describe a job function a manager in Brazil might be called leader in Japan. Within a talent ecosystem the taxonomy is the standard set of definitions employees use to describe job roles, skills and competencies consistently across the organization. Today within IBM, when a job opportunity gets posted, employee skill profiles are matched to these opportunities in a proactive way based on their availability. Eventually, both of these processes will be automated to eliminate any downtime.
Another hurdle is the development of a universal governance model that categorizes labor pools, such as full/part time employees, long/short term supplemental, subcontractors and students. This is important in knowing to what tasks employees can be assigned for a given opportunity. You don't want to sign up a part-time employee for a job that is going to take six months to complete, when a full-timer can do it in three.
Even with 330,000 employees, IBM is constantly gaining new skills through outsourcing deals and acquisitions. And its employees are encouraged to enhance their skills through internal education and university reimbursement programs. So while growth is beneficial, a challenge lies in the development of procedures to encourage employees to keep their skills taxonomy up-to-date.
The traits that make us human are also something that needs to be considered. People don't like to be moved around constantly, and it costs a lot more to ship an employee to China than to ship a two-ounce memory chip; there is also cost structure that needs to be maintained. And don't forget that you are dealing with the human biology, and people get fatigued and can miss their family. Using mathematical formulas, you can easily take these factors and employee calendars into account to ensure that you are most effectively managing your resources and not causing an employee to miss his daughter's sixteenth birthday or force that same employee to travel around the world in one week.
When you consider that in 1990 IBM had less than $5 billion in services revenue and in 2004 IBM Global Services was responsible for almost 50 percent of the company's revenue, growth was and is the key driver for its own implementation.
For these reasons and others, in January 2004 IBM developed a talent ecosystem strategy called the Workforce Management Initiative. It consists of three components, including an internal job bank, which is designed to deliver a one-stop experience to request, identify, assess and fulfill resource needs. The Workforce Management Initiative is expected to enable IBM to increase profitability and create a flexible resource pool in order to adapt to changing business conditions on demand. Already well underway, this past year it has reduced the cost of IBM's services business by more than $2.4 billion and has increased the visibility of resource deployment, resulting in a 3 to 5 percent improvement in utilization, which is significant considering that the average consulting partner at a large firm is utilized 52 percent, according to Kennedy Information Inc.
Improvements in cash saved and workforce utilization are just two of the advantages. According to a survey by Pace Productivity Inc., the average consultant works 63 hours per week, and as an employer you want those 63 hours to be billable. A talent ecosystem can help contract- and services-based organizations forecast billable hours more accurately to provide a more accurate financial guidance and to reduce the number of resource actions.
Steps to Consider Before You Get Started
- Deploy common and consistent skills taxonomy end-to-end to assess skills and talent across internal, external and sub-contracted personnel.
- Provide a single platform for comparing resource alternatives, to streamline the process for finding and procuring the most appropriate resource.
- Educate and communicate. This is essential in helping your employees understand the value and benefits of a labor-based supply chain before you implement it.
For years the supply chain was simply considered a cost of doing business. But today, companies need to re-think the role a supply chain as a competitive differentiator to lead in the era of on demand business.
About the Author: Harold Blake is director, Workforce Optimization, for IBM's Integrated Supply Chain.