Understanding the Relationship between Human Resource Management (HRM) on Supply Chain Management (SCM)
While supply chains have been playing a crucial role in several industries for many years, it is only in the past few years that supply chain management (SCM) has been treated as a separate strategic branch which can be improved to benefit businesses.
As soon as SCM started receiving its due importance, there began a search for the factors that affect supply chain and its functioning. While factors like inventory control, product design, industry standards, procedure costs, and distribution strategies were some of the few that were initially discovered to abundantly impact SCM, human resource management (HRM) is the latest to join the list.
While there have been a few studies done in the past to understand the impact of HRM on SCM, the research by the Department of Business Administration of University of Barcelona, Spain, clearly pointed out the relationship between the two.
The purpose of the study was to understand the impact of HRM on SCM which in turn also impacts organizational performance (OP) and customer satisfaction (CS), factors which play an important role between SCM outcomes (SCMO) and HRM.
The study used the previously validated structural equation model (SEM) which is based on five attributes including SCM implementation (SCMI), HRM, organizational performance, customer satisfaction, and SCMO. A survey was conducted on the basis of this model and 231 responses were recorded.
The study confirmed the significant impact that HRM, directly and indirectly, has on the SCMI and SCMO. Overall, the study suggests that successful implementation of SCM can not only help improve SCMO directly but it indirectly also increases OP and CS.
These findings make a very strong case for organizations to apply proven HRM practices to their supply chains to improve SCM to an extent where it starts functioning as a competitive edge. While businesses never thought of SCM as something that could be impacted by HRM, understanding the relationship between the two is simpler than it looks.
Working of a Supply Chain
If the complicated terminologies are sidestepped for a minute, supply chains are nothing but people. The entire chain is a group of organizations which work in downstream or upstream flows of services and products to deliver the final product to the customers.
This ‘group’ of organizations can be within a single company where delivery or supplies and production of products occur or can also be a very complex network of 3rd party suppliers, distributors, sales outlets and service providers. SCM aims to enhance the overall performance of the supply chain along with that of individual firms.
While several organizations have now started recognizing how important SCM is, most of them are yet to understand the fact that successful SCM relies on the people who are part of the supply chain. It is on the basis of the efficiency of the members of the supply chain that the supply chain would function.
There are already several studies that have confirmed that impact of HRM on the performance of the employees. The same practices can be adopted by the human resource department for the people who are part of the supply chain to improve their efficiency and performance.
From recruiting and selection, training and development, to compensation and incentive there are several practices in HRM that can be successfully used to improve the overall SCM.
If all of this is to be said in simple words, it basically means that the performance of the supply chain relies in the hands of people who are part of the chain and HRM is an efficient tool to improve the efficiency of the supply chain members and ultimately improve the supply chain and overall functioning of the organization.
Understanding the Relationship between Human Resource Management (HRM) on Supply Chain Management (SCM)
Improving Customer Satisfaction with HRM
While the positive impact on SCM through successful HRM practices is clear now, how the same can also help in improving customer satisfaction as the University of Barcelona study suggests?
This relationship too if pretty straightforward. Supply chains are only as strong as their weakest link. For instance, let us assume that you run a business in the USA and import products from China. You’ve selected an exporter and have successfully moved the products through customs and then to the distribution center sooner than expected.
But what if the distribution center delays the delivery to the customers? Your customers would surely be unhappy and this means that the supply chain of your company has failed. It is not difficult to understand that the retail industry relies mostly on customer satisfaction. In other words, the success of your supply chain has a deep relation with how happy your customers are.
So, you see there is an indirect relationship between HRM and CS too. With the help of successful HRM practices, you can improve your supply chain which in turn will help you improve customer satisfaction. There are a few time-proven ways in which supply chain can be improved for better CS. Some of them are-
- Selecting the right transportation partners
- Improving logistics planning
- End-to-end supply chain analysis
- Using technology for improving visibility and tracking inventory
- Linking back-end and front-end deliveries
- Measuring supply chain performance on a consistent basis
While all of these steps revolve around SCM, HRM is indirectly involved in implementing them and making sure that they deliver the expected results.
Conclusion
HRM was always considered a strategy of managing the workplace culture and environment. It is with the help of studies that its impact on other crucial business processes has come to light. With businesses now focusing on SCM to gain a competitive edge, improvements to HRM seems to be an efficient way to directly improve the supply chain and gain added benefits with respect to organizational performance and customer satisfaction.
With the rising competition across every industrial sector, businesses are now searching for innovative ways to improve their performance. Working on SCM is a new and effective way to not just bring more transparency to the business practices but also improve your reach through better customer satisfaction.
Even the traditional HR practices like recruitment and planning, training, and performance appraisal can be applied to the supply chain in order to attain larger benefits which would help organizations gain significant benefits over time.