The global economy is undergoing an unprecedented period of upheaval and as the needs of the global organization change, so too do those of its people. In an age of global economic uncertainty, operations must become both efficient and effective, streamlining supply chains while ensuring that delivery and output remain high. While corporations turn their focus to the bottom line, however, the impact upon staff — and in particular talent — must not be underestimated.
At Badenoch & Clark, we have identified a key trend that is set to radically change how supply chain teams manage their HR function and the way in which they attract and retain talent. Whereas recruitment firms such as ourselves have previously been taken on for project specific hires, we predict that multinational firms with complex supply chains will require tailored HR solutions. We believe that supply chain teams will move from a preferred supplier model to a strategic and focused Functional Outsourced Partner (FOP) concept. This will enable strategic planning at all levels of the hiring process, creating a talent pipeline that invigorates the heart of the supply chain itself. It will also reduce the need for the services of management consultancies, instead creating space in which a ‘talent consultancy’ can emerge, refocusing the supply chain HR function on the necessity of attracting, developing and retaining talent in a fast-paced, global economy.
If succession planning and talent management have not been inscribed into organizational culture prior to the move, it is highly likely that important talent may be lost in the relocation process.
The conditions affecting the global supply chain have been well documented. The onset of the global financial crisis has forced corporations to focus on supply chain excellence, aware as they are that the inability to move their products to the right place at the right time can threaten important relationships and weaken profit margins. There is an impetus upon supply chain managers to seek bullish growth whilst lowering base costs; this must seamlessly take place whilst attracting and maintaining a workforce of talented individuals able to implement these ambitious projects.
The supply chain in many ways represents one of the greatest opportunities to leverage profits and influence change, creating demonstrable cost benefits at the bottom line. In response to the challenges faced by supply chains across the globe, consultancies such as KPMG are advising their clients that improving supply chain management is a key driver in the push to improve performance and emerge from the global economic downturn with a streamlined, effective supply chain that is able to compete in an increasingly contested market place.
Tax Efficient Supply Chain Management (TESCM) is a key service offered by management consultancies, and seeks, according to KPMG, to integrate “supply chain design with tax optimization, delivering significant increases in profits.” TESCM is particularly attractive to global organizations needing to drive cost reductions and operational efficiency through their supply chain, particularly when experiencing organizational change, mergers and acquisitions, or when expanding into new markets and business channels.
Offering a wide range of tailored TESCM services, KPMG promise increased profit after tax, simplification of intra-group transactions, and, above all, improved supply chain management through the creation of centrally controlled strategic and tactical operations.
Whereas operations would normally be spread across continents, with procurement and supply chain teams siloed in a range of operational centres, TESCM recommendations create a single, central HQ, where all procurement and central supply chain management functions are run. By streamlining the business, TESCM creates significant opportunities to reduce costs and make business processes more efficient.
Although TESCM solutions have demonstrable operational benefits, the tax efficient supply chain model may prove to be increasingly taxing on the wider workforce. Primarily, the implementation of the solution has its own logistical issues which can become an HR nightmare: the logistics of moving an entire workforce to another location, or differing employment law regulations bring up a whole host of issues which require individual solutions.
The repercussions of such a move may well contribute to tensions within a company’s workforce and lead to a drain on talent, which can have a detrimental impact upon the organization as a whole. Failure to prioritize talent during supply chain restructuring could well lead to a drop in performance in a vital business area.
A key issue faced by many organizations in the process of geographical relocation is simply the lack of a sufficient talent pipeline. Indeed, if succession planning and talent management have not been inscribed into organizational culture prior to the move, it is highly likely that important talent may be lost in the relocation process. Given the current economic climate, retention may be more difficult than expected, particularly if competitors are actively seeking to poach your top talent. The loss of talent during the relocation process is a risk that HR directors responsible for the supply chain function are acutely aware of and actively preparing against.
The support of a preferred supplier has long been essential to a strong recruitment process. The process, however, has often been ad-hoc, sporadic and organized on a case-by-case basis. Such a system is unsustainable: the hire takes place, and the contract ends, without a real development of the relationship.
In place of the current system, it appears that a more functional and tailored approach must be taken by recruiters. Thus, there is a need for what we at Badenoch & Clark have identified as a Functional Outsourced Partner (FOP): a business partner specifically tailored to a function, such as supply chain, on a regional or even global scale who is able to fully develop an understanding of the critical needs of your organisation and develop strategies and solutions that make best use of your people. Besides taking on project specific hires, a FOP will allow organizations to develop a holistic and sustainable support network to support their recruitment needs; all of which will be offered by a single supplier.
As such, in a situation in which the recruitment consultant offering may previously have been external and siloed, an FOP supplier will:
- Have a dedicated function-specific, global or regional account management team with implants working within critical client sites.
- Partnerships with consultancies and external organizations to ensure they are ahead of key trends, rather than merely responding to them.
- Working directly with both HR and supply chain teams, the FOP will identify areas which require critical investment and have a current talent drain.
- FOPs can tailor recruitment strategies to the specific needs of the business and ensure consistency in ‘sell:’ working on both active and passive candidates, cementing a strong employer branding profile and creating a broad network of passive candidates via social media tools such as LinkedIn.
- During the process of relocation, an FOP can become part of the process itself, creating a talent pipeline to ensure a sustainable future for the business, and identifying key areas of development in critical business areas.
The FOP becomes not only an intricate part of an organization’s people management strategy, but a strategic partner in the development and retention of talent, which is in many ways the core of the business and critical to the proper functioning of the supply chain itself.
It is in this sense that the FOP could supersede the need for other consultancy services. In addition to permanent talent management services, it can offer the interim support integral to successful team transitions. This might include interim HR support, or wider operational support on the integration and transition of IT systems, and the implementation of restructuring programmes; if effectively utilized, an FOP could result in a 40% saving on external consulting spend. While there may be a higher initial spend to create the relationship, taking on a Functional Outsourcer Partner will negate the requirement for high cost ad-hoc recruitment spending.
A FOP relationship will have demonstrable impact upon the organization as a whole. Not only can it provide an outsourced solution for the transfer or creation of whole teams within new or
existing locations and provide additional services for outplacement management and interim support, it also offers Senior Executive search services and the development of a strong talent pipeline via junior to mid-level recruitment and outsourced graduate recruitment.
The key point to be underlined here is that while separate recruiters might offer such individual services, they will now all be offered by one supplier. The outcome: an exponential increase in talent retention and a major reduction in HR costs over a 3–4 year period.
Imagine the future: a cost effective, strategic partnership advising on and implementing high level recruitment strategies at multiple levels of the business. As supply chains become increasingly global, the Functional Outsourced Partner could well be vital to ensuring that talent attraction and retention remain top priorities for HR directors.
This article first appeared in Supply Chain Europe
