Making demand planning less demanding

Posted by Laurence Cramp on September 17, 2015

Capacity Demand Image

The case for better workforce demand planning

It’s sobering that over half of UK businesses are not confident there will be enough people available in the future with the necessary skills to fill their high-skilled jobs (CBI). Most jobs created in the decade 2012 to 2022 are expected to be high-skilled ones and most firms are looking over the edge of a rapidly approaching resourcing cliff.

We know that skills and their effective application are fundamental to sustaining UK productivity growth but the reality for most engineering, telecoms, transport and utilities firms is that the skills shortage is starting to bite now and more immediate action is needed.

Competition for skills is a big concern and adds cost to recruiting and retaining the workforce needed to deliver against objectives. We also see a range of fundamental challenges including:

  • Knowledge exists in siloes and leaves the business when employees do
  • Apprentice recruitment has yet to keep pace with the level of workforce retirement
  • Operational staff are not sufficiently prepared for the skills requirements of new technologies and lacking sufficient training
  • Cross-skilling isn’t enough – particularly for areas such as network engineering, systems engineering and infrastructure
  • There is a mass of HR and workforce data but little HR analytics to make sense of it
  • Existing HR and ERP systems are piecemeal and not sufficiently integrated to enable workforce decision-making
  • There is a need to do more with less – without knowing what good utilisation, productivity levels and KPIs look like

It takes time to build up a skills pipeline and we speak to various organisations that are still postponing decisions about how to address the size, scale and shape of the challenge.

Workforce Development is about getting the right people, the right skills for the right jobs at the right time.

One answer is more effective demand planning leading to a robust strategic workforce plan. Effective demand planning helps to ensure that the talent is in place to realise operational goals and that workforce supply and demand is integrated into the broader strategic planning cycle.

Organisations with complex operations need to ensure that resource matches demand as closely as possible, maximising available capacity, minimising work execution fire-fighting and ultimately achieving a more even flow.

We advocate four main areas of focus:
Demand Planning Areas

Quality analysis of supply (availability, capacity) and demand (work required to meet delivery expectations) is fundamental to understanding current resource gaps and determine future requirements.

Demand planning, whether achieved through manual or systemised methods, helps to demonstrate how to meet demand requirements at the optimum cost.

Taking a holistic approach to demand planning

When we support clients in this area, our approach typically includes the following steps:

Demand Model Approach

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1) Robust Demand Inputs

Demand inputs need to be accurate and representative. Without the right level of data integrity, demand data can be sourced in an ad-hoc manner and spread across disparate systems and processes. A variety of inputs will be required including resource levels, resource productivity, work delivered, staff utilisation and KPIs, and output. Workforce analytics can aid understanding of the age profile and demographics of the workforce and its current level of skill.

2) Understanding Trends

Modelling needs to take account of seasonal variations, the historical level of work delivered, the level of planned and unplanned work and productivity inputs such as the levels of travel and overtime. Trend analysis needs to include an understanding of the supply chain and contractor base – particularly its ability to adapt to historical demand volatility and mitigating strategies used. In service-orientated businesses, demand management needs to be associated with anticipated customer demand – the markets, products, projects and services that are planned and the resulting demand they will generate.

3) Evidencing Staff Utilisation & Waste

In its most simple form utilisation is a measure of time spent working. Maintaining high utilisation of operational staff drives higher billings or re-charges and ultimately higher revenues. Resource utilisation measures the time resources spend working on useful projects and tasks. What is defined as ‘useful’ differs by organisation but for the field operations clients we work with, this would typically include resource spent on a specific set of work, including client, project and internal work and may include a proportion of travel time, professional development and agreed downtime.

We view waste as anything the customer is not willing to pay for (directly or indirectly) – so typically the work that remains once value-adding activity has been delivered. For field operations this can include delay through transportation, delay due to spares and inventory, unnecessary waiting, overproduction, over-processing and the occurrence of faults and defects. Waste is activity that hinders progress of a product or service further down its ideal process. The efficiency and true utilisation of resources should account for the current level of waste and what level of utilisation is achievable.

4) Modelling Demand

Once the inputs are right, the constituent parts should be assembled in a database, spreadsheet or demand planning application of choice. We like to start simple and then add in complexity. The most important thing is that the model can be used to drive decision-making – whether recruitment, risk management, pay and reward, talent development or business transformation and organisation design.

Planning is bringing the future into the present so that you can do something about it now

Alan Lakein

5) Taking Action

With the right support, organisations use demand plans and strategic workforce plans to create a compelling case for change, signposting the processes and measures that need to be optimised to better align work delivered and customer value. Demand planning shouldn’t be a one-off academic exercise, but should flow from enterprise strategic planning, objective setting, business unit and financial planning. Scenario analysis will allow stress testing and evaluation of the tolerance levels and responses. Demand can be levelled through smoothing, sequencing, optimising or reducing work. To ensure that available capacity can be sustained, however, business processes, workforce schedules, shift patterns and employee terms and conditions need to be carefully considered and optimised. Planning works best when part of a fully integrated system – see my colleague Mark’s recent blog for more on this.

How we can help

If you would like to make your demand planning less demanding, feel free to get in touch and we’d love to discuss it further. We’ve helped clients in a range of complex industries to build more effective strategic workforce plans and fully realise the benefits of more robust integrated planning approach.

Contact us here.

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Laurence Cramp

Laurence has worked in strategy, transformation and change for several years, supporting a broad range of UK and international clients including some of the leading energy, utilities, telecoms and transport organisations. Our clients ask Laurence to help shape new ideas, working closely with complex stakeholder requirements to deliver transformative solutions for their most critical challenges.