IBM applies supply chain principles to human assets
By Staff -- Manufacturing Business Technology, 5/1/2005 12:00:00 AM
Like many technology companies, IBM has long targeted better supply chain management as a means to reduce operating costs and improve response times. During a senior executive meeting in 2003, CEO Sam Palmissano asked his team why the same principles couldn't be applied to deploying and managing human skills and assets.
"As we have become more of a services company, we've thought that if we could use some of those precepts in staffing projects, we'd be more effective," notes Harold H. Blake, director of workforce optimization.
Given a decade's involvement managing IBM's hardware supply chain, Blake was tapped in January 2004 to manage what the company called its "talent ecosystem." It was soon discovered that the human resources (HR) group only tracked skills at a very general level, and there was no single office responsible for deployment of 250,000+ workers worldwide.
"We did not have an end-to-end human supply chain, but instead pockets working on resource management in an ad hoc way," claims Blake.
Mirroring what had been done in the hardware supply chain, the first step was identifying a standard taxonomy of skills against which staff deployment decisions could be made. "In hardware," says Blake, "we didn't want people designing multiple versions of the same memory module. We wanted to do the same thing with human assets."
Within six months, a master taxonomy was devised of 30 primary and 30 secondary job categories, which in a hierarchy covered more than 500 roles. Significantly, given the company's experience with its manufacturing supply chain, there was relatively scant overlap in jobs and skills categories in the manufacturing engineering group. By contrast, there was significant overlap across IBM Global Services.
The next item was to keep the taxonomy alive and timely. Over the past year, executives at the senior VP level in each line of business received a tool kit to analyze skills needs, projected out over the next two to five years. One objective was to define roles that could be performed by contract personnel.
"Our goal is to rely on subcontractors for commodity skills, while keeping core skills in-house," says Blake.
IBM has so far identified potential savings of up to $500 million annually based on staff utilization improvement of only 3 percent to 5 percent. To turn the problem to profit, IBM Business Consulting Services may offer to help organizations assemble their own HR supply chains.
