The phrase "human supply chain" conjures up stark images in my mind of people braving the Southwestern desert to cross the border into the U.S. But human supply chains are actually a real business concept under consideration at IBM. A recent Fortune column alluded to how IBM's consulting division is seeking ways to better compete against lower-cost labor in India and elsewhere by applying supply chain management to professional services.
Since consulting is driven by metrics such as capacity management, utilization and logistics, this application makes sense. But, to what extent can you apply supply chain management to this challenge? Let's imagine we have a consulting supply chain management tool to help us with this. We'll call it a Services Resources Planning, or SRP, system.
Here's how a SRP solution might work. Imagine you run a practice at XYZ Consulting, a global U.S.-based consulting firm, and a pending project in Boise, Idaho, will require 30 consultants for nine months.
First, some pre-planning is always good. You would use the pre-planning module of the SRP system to frame the project by resources, duration and other relevant parameters to determine project viability given certain resource cost and margin assumptions. This tool would also help build preliminary cost models, perform preliminary margin analysis and determine project viability and risk.
Now, imagine that XYZ Consulting sells that project. Based on the statement of work, the 30 consultants would be comprised of several roles and skill sets - architects, developers, business analysts, etc. Furthermore, the project starts in three weeks, which is fast. Recalling the previous analyses, the resource manager now loads the sold proposal into the SRP system to establish a working project plan.
This would involve a few critical activities. First, the sold price and terms of the project would be considered - is it fixed price, time and materials, or cost plus? Next, given the cost model constraints and the timing requirements, we then have to find the resources. The SRP solution will have a resource view of all consultants in the organization worldwide. Sounds like a real-time inventory capacity planning and visibility tool, doesn't it? Resources that have the right skills, within the project cost parameters, and are available are selected first. They are assigned to the project and notified that they are "tagged" for a project in Boise, Idaho, pending a client executive interview. If they have conflicts, these will be visible via a "pre-tagged" feature. At this point, the respective project teams will negotiate for the resource.
Now, what about when there are still critical roles to be filled and the targeted resources are deployed elsewhere? In this case, the SRP system allows a search of comparable resources that can be reallocated to fill total demand and yet allow a critical resource to be assigned to our new project. This replanning and reallocation module of our mythical SRP would provide multiple options for our project's key resources and roles.
This entire scenario reeks of supply chain management concepts - finite scheduling, enterprise resources planning, supply chain execution and logistics. Based on this hypothetical scenario, there could well be tremendous value in applying supply management concepts to professional services. I don't know if IBM is developing a SRP system, or if there already is one commercially available, but I do know this: Like manufacturing supply chains, IBM's success will still come down to execution.