The Intersection of Talent, Technology, and Transition – How Do You Balance It?

Supply Chains run on talent, technology, and good transition management — but it’s a difficult recipe to get right because it not only requires the right mix, but the right execution because, just like a soufflé, the perfect mix can still fall flat. So how do you get the right mix? And how do you execute it properly?

Let’s step back a bit. For years, consulting companies and project managers said it is all about people, who do the work; process, that people follow; and technology, that people use to execute the process. And they were right. That’s a basic requirement for success in any company. But it’s not enough in today’s supply chains. And there’s two big reasons for that.

First, we’re not in the industrial revolution where economic growth depends on manufacturing which runs on a production line where you need a lot of workers who do well defined, easy to teach tasks. We’re in the knowledge economy where you need educated, innovative, self-reliant growth leaders who can do a wide variety of tasks, dependent on the situation at hand. Warm bodies in seats are not enough anymore — you need talent.

Second, with supply chains global and the participants many and dynamic, processes are no longer static as they were in the late stages of the industrial revolution where one company controlled the goods supply chain end-to-end and processes were well defined and relatively static. Now they are dynamic and have to constantly adapt as parties change, trade routes become temporarily inaccessible, raw materials and components become (temporarily) unavailable, and consumer demands and market availability changes. Static processes are not enough anymore, you need dynamic processes and transition management to manage them.

The only component that hasn’t changed is the technology component, because technology is constantly changing and you still need the most advanced technology, just like you needed during the industrial revolution to keep up with your competition. However, the technology is always in transition and if your technology is too far behind, you may not be able to compete even with the best talent and transition management to throw into the mix.

So we definitely need the right mix of talent, technology, and transition management to succeed — but how do we balance it in our supply chain to make sure the supply chain rocks (because we are the rock stars of the resource revolution)?

The answer is simultaneously ridiculously easy and insanely complex.

Alignment.

Your talent, technology, and transition management game plan must all be aligned.
What does that mean? We’ll tackle that in an upcoming series of Sourcing Innovation white-papers this fall, and offer a few hints over the summer. So, keep your eyes here!

You’re Understaffed. And You’re Not Alone. Now What? Part V

You are very well aware that you are understaffed and that you need to do something about it. You’re also aware that you may need to, or want to, outsource your category, project, or staff augmentation requirements. And, after our last two posts, you know that you better make sure that the category or project first passes the sniff test and lends itself to vended outsourcing before you get ready to ship it out.

But you still don’t know if outsourcing is the best decision. How do you determine that? You compare it to your most viable insourcing option. And how do you make that comparison?

Return On Investment

More specifically, what is the ROI of going outside versus staying inside? If you’ve appropriately qualified the project, then you should have an expected return, which you used to determine whether or not the project was incentive-friendly. The base ROI is easily calculated as expected return / expected cost.

The ROI inside will be calculated similarly. What is the expected cost of augmented staff and what return do you honestly think that person will achieve. Remember that, unless that person is a seasoned professional with lots of expertise in that category or project, that person is not likely to achieve the same return as a professional working for an outsourcing provider that tackles that type of category or project day-in and day-out. Plus, as they won’t have the same level of experience, or the same tools at their disposal as an outsourcing professional at the outsourcing service provider, and will have to deal with your organizational politics, policies, and ramp-up, it will take them longer. So even though the hourly rate of an internal resource may be lower, when you consider that more hours will be required for a lesser reward in the average, the ROI is not likely to be as high as you might initially think.

In other words, while an outsourcing firm will always make the argument that outsourcing is the clear-cut solution, it’s not always. If they are willing to put their best on the line and the category or project is suited to them, it will usually be the case that outsourcing is the right decision. But if they don’t have an appropriate expert, it’s going to take them more time to deliver a lesser reward, which you might be able to top by bringing in a hot-shot pinch-hitter for a one-off project.

In other words, there’s no one-size fits all answer and each project will have to be judged on the merits of keeping it in versus the merits of sending it out. And if you need help with that analysis, get a third party consultant to help you make that decision.

You’re Understaffed. And You’re Not Alone. Now What? Part IV

By now, you are well aware that you are understaffed and that you need to do something about it. You’re also aware that you may need to, or want to, outsource your category, project, or staff augmentation requirements. And, after our last post, you know that you better make sure that the category or project passes the sniff test before you ship it out.

That’s a good start, but if the outsourcing is going to work, it probably has to be vested. So before you check off outsourcing as a valid option for consideration, make sure it meets the requirements for a vested outsourcing arrangement.

  • Outcome Focussed
    A vested outsourcing arrangement is outcome-based, not transaction based. If the project is not focussed on an outcome, such as cost reduction, value add creation, etc., and is merely focussed on transactional invoice processing, it’s not a good candidate.
  • What Focussed
    A vested outsourcing arrangement can define the outcome irrespective of the how.
  • Measurable
    The outcome can not only be clearly defined, but can be objectively measured against a well-defined scale.
  • Incentive-Friendly
    The measurable objective can be used as a foundation for performance incentives to incentivize the provider to perform better.
  • Joint-Governance Friendly
    The category or project lends itself to insight based governance, where you work with the supplier to overcome challenges and obtain better performance.

If you check all of these boxes, then outsourcing is a very viable alternative. But is it your best one? At this point it all comes down to what your insourcing option is.

So how do you make your final decision? We’ll address that in our conclusion to this series.