Supply chain approaches are gaining prominence in labor analysis and human resource management. As organizations seek to become more efficient and optimize their labor costs, labor supply chains become a preferred strategic option and a fundamental philosophy governing HRM decisions and policies. Despite the efficiency benefits offered by labor supply chains, they also have a number of serious deficiencies. In essence, they necessitate the implementation of relevant monitoring and performance measurement systems in ways that help organizations evaluate, improve, and sustain excellence in their performance. The use of labor supply chain software is another area of controversy. This being said, the most feasible way to offset the disadvantages of labor supply chains is to avoid standardized approaches and consider the “human side” of efficiency in workforce decisions.
Labor supply chains represent a novel yet popular concept in organizational science and practice. According to Schnorbach (2004), supply chain principles hold a promise to restructure conventional approaches to workforce management, with a new emphasis made on efficiency, cost-effectiveness, and management sophistication. This being said, a labor supply chain “comprises all of the manual functions required to plan, source, build and deliver products from supplier to customer, as the Supply Chain Council’s model would indicate, to which we would add customer support” (Schnorbach, 2004, p. 4). Needless to say, it represents an entirely new paradigm, which emphasizes the importance of quality workforce management at the point of production. Effective labor supply chains uncover the benefits and costs associated with each employee, facilitate selection and recruitment of the right people to the right jobs, empower businesses to monitor employee performance throughout the day, and send relevant alerts when the quality of employee performance does not meet the required standards (Schnorbach, 2004).
Without doubts, the logic behind labor supply chains is extremely compelling. Yet, it also displays a number of significant shortcomings. In essence, the use of supply chain approaches in workforce management shifts the focus away from people towards organizational goals, efficiency, costs, and employee performance. To put it simply, labor supply chains can hardly be described as being people-oriented. They reduce employees to the units of production, which are expected to fulfill their purpose and function effectively, thus encouraging the organization to work towards its strategic goals. Another problem is that cost optimization and efficiency as the two labor supply chain priorities may compromise organizations’ historical commitment to developing healthy workforce practices. More specifically, in their striving to reduce labor costs and their pressure on supply chains, more organizations choose to outsource their labor concerns to less regulated markets (Robinson & Rainbird, 2013). Employees assume greater responsibility for managing their workplace risks, while organizations are enjoying the profits derived from adopting labor supply chain principles (Robinson & Rainbird, 2013). The changing patterns of production and distribution at a global scale favor employee discrimination and even abuse (Robinson & Rainbird, 2013). The limits of legal responsibility shift, questioning the historical position of workers in organizations. However, labor supply chains exemplify an acute response to the broader and more profound changes in HRM, including labor outsourcing, wholesale downsizing, and the growing reliance on technologies (Malykhina, 2005). Thus, they are likely to become a leading organizational trend in the foreseeable future.
As mentioned earlier, labor supply chains reduce employees to labor or production units. Under the discussed philosophy, workers must possess certain qualifications to find a job. However, labor supply chains also seem to undermine the very sense of job security in organizations – as long as the organizational and market conjunctures change, workers can be assigned to a different set of obligations and functions, but as long as their qualifications allow such changes. In this sense, one of the best ways to adjust to the new workplace environment and build a sense of trust is through communication and collaboration. Modern organizations pose a structural challenge, and cooperation across multiple organizational domains becomes increasingly problematic (Forgie, 2011). However, only through open communication workers can clarify the strategic and tactical goals they are to pursue, as well as the functions they are expected to fulfill within the labor supply chain.
The discussed changes in organizations are also accompanied by sweeping technology shifts. Software is becoming deeply embedded into all aspects of workforce management and labor supply chains. Whether or not I am in favor of using labor supply chain software is an extremely difficult question. I would say that I support the use of such software in organizations, but only if it fulfills its promise. To be more specific, the implementation of labor supply chain software raises numerous questions, the key one being related to capacity of automated software solutions to manage and solve HR problems. Malykhina (2005) writes that the latest software packages are more than simply pools of worker information; the newest applications correlate that data with other sources of information such as client preferences. If these applications fulfill this promise effectively, I would welcome their use in labor supply chains.
This being said, labor supply chains have their strengths and weaknesses. To offset the disadvantages of supply chain approaches in labor management, organizations should avoid standardized solutions and do not forget about the “human side” of workforce decisions. Labor supply chains promise to enhance organizational efficiency, but it is wrong to believe that, by reducing workers to labor units, organizations will easily achieve their strategic objectives. Even the best labor supply chain software will not provide an ideal solution to the workforce problems facing contemporary organizations. The existing labor supply chain modalities should be tailored to the unique HR needs of organizations, while allowing workers to have voice in making supply chain decisions.
To conclude, the growing popularity of supply chain approaches to labor is justified by the changing conditions of organizational and business performance worldwide. Outsourcing, the growing emphasis on cost-effectiveness and efficiency, organizational downsizing, and resource constraints necessitates the use of innovative workforce management frameworks. Labor supply chains promise to improve the quality of labor within organizations. However, they also miss out an important “human” dimension. To offset the disadvantages of labor supply chains, organizations should avoid standardization and empower workers to have voice in supply chain decisions that affect their position and performance.
- Forgie, J. (2011). Working effectively in a matrix: Building and sustaining cooperation. International Journal of e-Collaboration, 7(4), 61-70.
- Malykhina, E. (2005). Supplying labor to meet demand. Information Week. Retrieved from http://www.informationweek.com/supplying-labor-to-meet-demand/d/d-id/1031192?.
- Robinson, P.K., & Rainbird, H. (2013). International supply chains and the labor process. Competition and Change, 17(1), 91-107.
- Schnorbach, P. (2004). Optimizing the labor supply chain. Red Prairie. Retrieved from http://www.logisticsit.com/absolutenm/articlefiles/902- RP_Optimizing_The_Labor_Supply_Chain.pdf.
