Fine Coupling: Can Human Resource Management Learn from Supply Chain Management?
Fine Coupling of People: An Idea Whose Time Has Come?
Manufacturers and distributors are succeeding in various approaches — including postponement, computer-aided manufacture, robotics, rapid response, positive tracking, and modularization — to fine-couple supply with demand for goods. To some degree, this has exacerbated the challenge to those responsible for staffing these activities by creating more frequent peaks and valleys in demands for talent. Are there lessons for human resource management in what is being done in the field of logistics? It apparently depends on whether we can get beyond the initial negative reaction to what, for want of a better term, is the potential "commoditization" of people. As one respondent, Quan Quan, put it, "The preference will be decided by your own core values about life."
Karen Burr, for example, asks, "What does this theory imply about the employment contract? ... I believe that many people join organizations to be part of something, to make a contribution, and to be a valued member of society. The very notion of looking at people in the same light as other resources implies that none of these things are important." Scott Lichtman agrees, pointing out that "to be efficient in this fast-moving era rather requires longer-term investment in skills and strategy adoption by longstanding employees ..."
On the other hand, Ryan Heinl believes that "something like supply chain management will be the next logical step [in managing human resources]. I think it is win/win for employers and employees to move in this direction. The hard question is not really how can we modularize people — this can be done with testing and certification, which already is practiced in the IT world — but rather, how do we get the organizations of the world to agree to standardized job types?" Suresh Annappindi points out that "...although people and products cannot be equated and subjected to the same exact metrics ... we can apply suitable common principles, albeit sensibly, to similar problems."
Others suggest that the question is somewhat moot, that in fact supply chain concepts are being applied to human resource management today. As Andre Mahfouz points out, "Many industries, especially retail, can profit from the 'power of modularity' at the human resource level.... Productivity will improve as the alternation of job assignments eliminates the 'indispensable' worker." Connie Luthy says, "I have practiced 'Just-In-Time' hiring ... in the pharmaceutical industry.... I have advised my client companies to outsource everything [outside their core competencies] they can."
The gap in levels of efficiency between markets for goods and for talent remains wide. Can it be closed? What will it take? Should it be closed? What do you think?
Two seemingly unrelated items prompt this month's column. First is the growing number of layoff announcements by companies taking advantage of the U.S. economic slowdown to get rid of hiring mistakes, redundancies from previous mergers, stockpiled talent, and excess employees resulting from failed forecasts. The second is a book, Design Rules: The Power of Modularity, about a monumental computer-design process study by Carliss Baldwin and Kim Clark that underlines the importance of design rules and processes intended to produce compatible components in a finished product.
Modularity in the manufacturing and logistics world refers to the design of products around a limited number of modules that can be mixed and matched in many combinations, depending on customers' needs. For example, General Motors designs and produces several transmissions, engines, and chassis that can be used to produce nearly its entire line of autos of different makes. Modularity is one of several innovations developed over the past four decades that have transformed the nature of supply chains. These include "postponement" (delaying until the last possible moment the assembly of components or modules), computer-aided manufacture and robotics (allowing the old "economic lot size" to be reduced to one unit), rapid response (utilizing faster, more dependable methods of transportation and rapid-transfer "cross-docking"), and positive tracking (allowing customers to trace the progress of their orders, typically thanks to the power of barcode technologies). These developments are symbiotic with new information technologies and the impact of greater information transparency throughout the supply chain. Either without the other would have limited relevance.
In total, these concepts and technologies have resulted in a "fine coupling" of supply chains that has removed costly inventory buffers and produced a huge sucking sound — that of inventories being sucked out of our supply chains. They allow us, for example, to design our own Dell computer and order it directly from the manufacturer (or a consortium organized by the manufacturer) for rapid delivery. It's hard to believe how little of this was possible just ten years ago.
At the same time that we devote massive attention to the reduction of waste in materials, one organization after another is announcing once again that significant cuts in personnel are necessary. The calculated cost of these "human inventory" mistakes will include only severance payments and relocation costs, not lost productivity and knowledge, or damaged customer relationships and human lives. Because they will be regarded as "planned reductions," they probably won't even be included in employee turnover calculations. The ultimate irony is that the "fine coupling" of our supply chains, through the removal of inventory buffers, may have made it more difficult to "fine couple" human inventory management.
Are there lessons to be learned in supply chain management that can be applied to the management of human resources? If so, what are they? What do you think?