Daily Archives: October 31, 2010

Seven Supply Chain Commandments? I Think One Commandment Is Enough!

SupplyManagement.com recently posted an article on Command and Supply which stated that if you apply the seven supply chain commandments to your procurement practice — and ensure its daily execution is faultless — you will achieve superior performance. While I don’t disagree, I think the commandments can be simplified and amalgamated. In fact, I think they can be reduced to one!

But first, the commandments:

  • Articulate a clear value-creation algorithm
  • Approach the supply chain as a comprehensive value delivery system
  • Segment the supply chain and consistently adapt it to the characteristics of each segment
  • Optimize the global operations architecture for scale, access, flexibility and risk mitigation
  • Selectively invest for mastery in differentiating capability areas
  • Deploy information systems that deliver insightful analytics, alignment and responsiveness
  • Drive process execution discipline with the right talent, powered by a culture that enables high performance

They’re all good. But I think this one commandment covers it:

Focus on Value

If you do, you

  • will create a value creation algorithm,
  • focus on the creation of a value delivery system,
  • segment the supply chain into segments which require different approaches for value creation,
  • optimize for scale, flexibility, and risk mitigation,
  • invest for mastery where the returns are greatest,
  • will acquire systems that provide real analytics, and
  • drive for continual improvement in process execution.

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Will CLM, SoW, and VMS Stem the Outsourcing Tide, or Will they Just Accelerate it?

One of the major areas of focus today in services management is the area of Contingent Labour Management (CLM) / Statement of Work (SoW) management, and Vendor Management Solutions (VMS). Big companies with big workforces, and especially big companies that use a lot of temporary labors, contractors, and service providers, not only spend a lot on people, but spend a lot on people who do nothing but manage the workforce — recruiting, hiring, support, project/contract management, layoffs / end-of-contract transitions / firings — as this has traditionally been a very time-consuming and cumbersome process (with all the rules, regulations, and firings, you can literally suffocate under the mound of paperwork you produce).

As a result, many large companies, in an effort to keep the process, and their spend, under control have elected to either outsource entire functions or hand over their management to a Managed Services Provider (MSP) [like Manpower or Kelly Services] that specializes in workforce management processes and can bring best practices and best-of-breed technology to its management. In some cases, it was the company’s only option as their area of expertise did not include staffing and their costs were spiralling out of control.

However, the state of affairs today is not like it was in years past. Modern CLM / SoW / VMS systems are streamlining the process by leaps and bounds, taming the beast, and allowing today’s HR personnel to focus on the people, and not the process. As a result, a task that may have been insurmountable for a small HR team ten years ago can now be easily managed today by that same team with the right technology and training. An organization that once had no choice but to outsource workforce management can now pull it back in house. But will they?

Or will they take advantage of the fact that your average MSP already has this technology employed, and in some cases, has a VMS solution that allows them to manage your workforce while keeping track of their performance. They’re used to it, they’ve trained on it, and they’ve already mastered the current best practices. They can be locked, loaded, and ready to go in a matter of days — as long as you’re willing to give up control.

So will the average organization take back control and bring their workforce management back in house with modern CLM / SoW / VMS systems, or will these systems just accellerate the outsourcing craze and the dominance of the MSPs? What do you think?

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