Forecasting Demand: HR and Supply Chain Management

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The value of relational strategies in HR and supply chain management as they apply to the deployment of human capital is a human resources hot topic in recent years.

Forecasting talent demand is not wholly dissimilar from forecasting product demand. A manufacturer will source for the most inexpensive and expedient methods of production. Some aspects will be outsourced, and the creation of a model that gets the product in front of the end-user with constancy and timeliness is a top priority. In alignment with these supply chain principles, respectively, are the human capital concerns of cost-effective talent development, attracting and hiring external candidates, and succession planning. While a supply chain model does have its uses in a variety of strategic HR and planning topics, with varying degrees of successful application, it has undeniable potential problems or limitations as well.

There are several concepts that have been adapted from supply chain management that address the issues of estimating demand and the uncertainty of supply as it relates to staffing levels. One such concept is the “make or buy” principle.

Make or Buy:

In applying supply chain management to the deployment of human capital with concern to the “make or buy” principle, there is a risk of overshooting or undershooting in estimating how many new employees to bring onboard. Employees can easily leave creating an unanticipated deficit. This model has its limitations because there is too much volatility with human capital, as human beings are just not a case of having too much inventory.

With supply chain management principles, an overstock of product can be resolved by marking down the price of the item to sell in less time, decreasing the weeks on hand and perhaps saving a company from having to sell the overstocked products at margin, but rather leaves the chance of making a profit. Also, at times products can be sold for a profit to another company or competitor that is willing to purchase a “hot item” at a cost a little above margin. This may still represent a profit or break-even scenario for the overstock of items.

This is not the case with humans, who cannot be given away to another employer in exchange for the cost that may have been incurred in hiring and training them. Additionally, assessing a trade-off between making and buying includes an educated estimation. This educated estimate is based on several factors, none of which are as easily and/or accurately determined when applied to the most hard to predict commodity – humans and their free-will. Baby-boomers are the most salient example of the unpredictable nature of human capital estimations, as the majority is reluctant to retire.

For these reasons, organizations would be wise to underestimate their hiring needs. This may be alarming advice to many HR executives who have become accustomed to over-hiring; creating a duplicate workforce of overlapping roles within the ranks without the actual need for increased census. If there is a deficit of employees to fill needed roles, organizational assessments, job analysis and subsequent succession planning allow for promoting internally or hiring from outside of the organization. Employers can effectively plan by examining which positions will be the most difficult to fill from the external job pool. Prepahttp://www.hurecomaverick.com/wp-admin/post.php?post=13975&action=editre by continually building rapport, attracting and recruiting candidates – building a bench strength that is accessible, but just so happens to be sitting with the other team until called up.

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Posted on March 1, 2015
By R. Tamsin Jones Human Resources News

About the author

Tamsin is a senior manager at Hureco Maverick; she is also a coffee lover, cruciverbalist, altruist, and advocate for corporate social responsibility and volunteerism.