Global supply chains
McKinsey have just circulated an article on supply chain management. I read it hoping to find information on local modularization, i.e., breaking up the supply chain in the way done by Boeing.
Rules-of-thumb for organizational structure
The article was about linear, but global supply chains. In HRM, we have very few rules-of-thumb to guide us about what is possible. Here are three that I gleaned from the article.
The demand for labor within a firm varies huge
1. Demand for mobile phones is often inaccurate by 400%. Evidently, if we have no idea whether we need to make 1 of something or 5 of something, we will have heaps of productive capacity idle much of the time. We are also going to have people hanging about, or we have to hire people at short notice with consequent loss of skill, team cohesiveness, and performance.
Companies who ‘play well’ with their supplier reduces their order times and save money on ‘capital employed’
2. A company who shared market information increased their suppliers’ confidence in the company’s predictions [industry unstated] and decreased inventory by 45% and order-shipment cycle time by 70%. Do we deduce that this reduction in capital-employed and stock-outs and the improved the cash-flow of the business with a positive knock-on effect into other areas like HRM?
Companies who share sales data with suppliers benefit from fewer stock-outs
3. A retailer who provided a supplier with direct access to their data and ceded the management of their supply chain improved the availability of availability in store by 70%, and overall supply chain inventory by 20%. Improvements of this size are likely to decrease lost sales and the price of the product itself and increase competitiveness.
Lateral communications across organizational boundaries
It is stunning that improvements of this magnitude come about from improving the lateral communication structures across the organizations boundaries.
I wondered earlier today whether there any examples of HRM across a whole supply chain. It would be an interesting project.