Role of Human Resources Planning in Optimization of Organization Supply Chain System

Supply chain can be interpreted as " a series of co ordinates effort and managing the inter-linkages of the various processes in the organization in order to executing the complete cycle of receiving an order up the the delivery of the order in the most cost effective manner".

This meant that the processes such a processing a new order received from a customer, to ensuring sufficient material are placed with suppliers to producing the order and deliver to the logistics for delivering to the customers.

It sound logical and simple enough to understand this concept as even before the term supply chain was coined up in the 1980s, this has been the way businesses are run throughout the whole world. However with the increase of competition among organizations and directly even between countries, the drive to ensure that the supply chain system serve the organization to drive it to further excellent.

This been said, the driving force to ensure organizations achieved it goal of increasing business and receive the rewards of increasing sales and profitability is the people.

When we discuss "people", we actually discussing about (a) right level of people to handle the tasks (b) right type of candidates to fill the job (c) right type of skills

I will called this the 3R.

There is no strategy which will work to ensure that you will win in a battle field when you may have all the weaponry in your amour but no soldiers or CORRECT TYPE OF SOLDIERS to operate the system.

RIGHT LEVEL OF PEOPLE

What this mean is that, if an organization is to function well, the organization has to be supported by its most important asset, i.e. the employees. Organization which take a hard look at the process of hiring and retaining it "non appreciative" asset will improve on it ability to attract the correct number of employees and this will keep ensure them to succeed in the longer run.

In many part of the world, we can see that organizations will "chop and slice" the number of employees once sales are negatively affected and profit drop. Sadly the choice is too simple to made when a company start to lose it shares and having a high cost of manpower.

However, this in itself reflecting the human resources planning in the first instance. How organization planned their resources and how a company view the potential of the businesses play an important aspect. Poor forecasting and poor execution of the strategic plan will eventually affect the manpower to sales ratio and taking middle ground view between some conservative and liberal view will be preferred.

Increasing employees efficiency instead of hiring will and should be the first option before any recruitment take place only for the risk of terminating these employees later.

However on the extreme side, there are organizations which failed to forecast well and took an extremely conservative view.

Many organizations are willing to pay overtime cost and additional delays to customers instead of ensuring the orders and total operation are run smoothly with the right number of staffing.

Overtime cost to the cost of production should not be more then 5% of total additional wages paid and in the long run anything more then this will mean the cost of the organization could be a :"runaway affect". I.e. escalating cost run up.

This meant that in the end of the day, the cost of overtime will be a "killer" to the organization and eat into profit and run up cost.

Right level of people is the total number of employees needed versus the sales forecasted and with people, it embodied the supply chain concept more effectively, i.e. the battle can be fought at a correct level.


RIGHT TYPE OF CANDIDATE (EMPLOYEES)

This has to be a serious consideration as well.

Type of employees hired, most importantly is not to make up the correct level of numbers and head count.

When Human Resources Department are pressurized to get the number up, the most common mistakes is to hired employees which will made up the numbers and ignoring the candidate profile.

For a company to successful, the right type of people hired will be extremely important. The key is the ATTITUDES AND APTITUDES OF THE PEOPLE YOU HAVE.

Positive attitudes will bring oiled the company manpower engine smoothly just like a new car and aptitudes will come handy with the correct attitudes.

Without having a right resources, an organization will always and normally run into road blocks. Human being are sometimes like an animal in the jungle. I.e. been territorial based and territorial based attitudes although is necessary to function correctly each employees own scope, but this can also bring disaster if there need to be a functional or system changes in the organization in order to improve things.

RIGHT TYPE OF SKILLS


Employing the right experience and skill level is important but not as important at having the right type of employees.

Hiring employees with the correct skills and experience bring advantage to the organization especially in the top level decision and strategic type of position. You may able to move faster a head but a organization which can think differently and outside the box and hire personnel in different industry may also be highly rewarded as well.

By been different and not stick to stereotype, Human Resources recruitment policy can bring better
rewards. Other experience from other industry may and will able to complement the industry you are in.

Human resource role in ensuring long term key success to an organization supply chain improvement and stability need to be reviewed constantly and with it, any system to be in placed will only then worked properly like an oiled engine tune to run a long, long marathon......

BUYER MANAGED SUPPLIERS SYSTEM

I just came back from a two weeks working visit to a small company in Ci xi, Ningbo, China. Me and my colleague practically struggled more then 12 hours per day during the course of the visit to ensure a new product are manufactured to the specification and scope of our organization.

During the course of the working visit, we observed many first hand working behavior of the locals and No, i am not going to discuss the new product status and the local managements view here. What I am going to talk about is supplier selection!

As many buyers will attest to it that cost of material will be utmost importance to the final product cost of the final product to be sold by the company in the market. Unfortunately in most part of the world, the cost of the product is bench-marked against the quality of the product. Thus, the higher level of effort put by the producer onto the production quality and overall standard, the higher the cost of the final parts.

The cost areas can be in the area of:-

a) Material used and cost of the raw materials itself
b) Cost of production, example production cycle time versus the wages paid
c) Fixed assets overhead cost of depreciation
d) Quality department overhead
e) Overall factory general expenses and management overhead cost

We all have heard of VMI system where the vendor will managed the inventory system for their customers. I will like to introduce BMS system where the procurement division will managed the suppliers.

 The company we decided to engage for this new product development can be considered a very small family unit operation and none of the system you will expect them to have is non existent. So many will asked why the hell we choose them to develop a completely new and strange product for the global market?

Well, the reason is simple, COST.

However in this scenario, the easy part is they will have a much lower overhead compare to established company with the international system and overheads cost distributed. The hard part is how to managed an organization which is efficient in cost but the risk aspect on quality is high.

Many will argue that this is no brainier at all as when qualifying a supplier, we need to review the overall aspect on cost, quality, consistency in system management, delivery on time record and other social and environmental aspects. Why this now?

There are a number of reasons we did this:-

a) the overhead cost is lower and thus product cost
b) we able to tune them to our need as they are a small set up and the business proposed to them will be grabbed with two hands by the owner
c) managed the process flow system and asked for implementation
d) control the cost of production by setting up process output monitoring
e) ensure they meet all local legislation on environment and social responsibility
f) when come to price negotiation, we as buyer will have upper hand as we knew their costing in details
g) material specification and suppliers are selected on their behalf based on quality and cost

By managing in this manner, buying power in term of delivery, pricing and quality performances will be controlled and view from the buying office.

There are many small family units companies around the world, especially in Asia are awaiting to be explored in such manner and if your organization have the volume and purchased value, looking into a "junior" partner to help your company growth will be an excellent strategy.

However, when managing such strategy there a long term disadvantages such as:-

a) the supplier expanded their business due to higher turn over and they will able to secure other accounts to support their business, thus, need to be wary and close monitoring.
b) over reliance of single source buying if the product is successful and create a demand pattern out of expectation.
c) risk management aspect

To counter these disadvantages, a 2nd choice supply base will be needed to be secured and even if this will be slightly more costly, this benefit will bring long term stability to the supply base. Your 2nd choice partner will be a organization with larger set up and system in place and cost can be higher then your developed "junior partner".

Developing a second choice will avoid your organization been taken "ransom" and also ensure that comparison are available.

However to take note, developing in such manner, an important aspect will be the production facilities evaluation will be an important factor as well.

In BMS system, the role of the procurement and quality function will be key to success and undertaking these system in your company also require much ground work to be done. Your company is practically running the supplier operation including reviewing cost of raw material and components, checking and confirming production plan scheduling, quality measurement report which the supplier will handle and emailed to your quality department for confirmation and reviewing.

The closest you can compare this will be to outsourcing system but in outsourcing, the bulk of material will be provided by the principal company but in here, the supplier are genuinely producing the parts and the buying organization closely monitored it.