KPI #8 - Contingent Workforce Planning: Optimizing the Modern Supply Chain

Introduction

According to Allied Market Research, in 2021, the worldwide market for managing contingent workforce reached a value of $171.5 billion. Forecasts indicate substantial growth, with projections expecting it to soar to $465.2 billion by 2031, representing a robust compound annual growth rate (CAGR) of 10.5% from 2022 onwards.

This blog post delves into the concept of the contingent workforce, the essentials of contingent workforce planning, its growing importance in the supply chain sector, and strategies for effectively integrating and managing this vital component of the modern workforce.

Understanding the Contingent Workforce in Supply Chain Operations

The contingent workforce refers to temporary, freelance, or contract workers who are not permanently employed by the company but are engaged on an as-needed basis. In the context of warehouse and supply chain operations, contingent workforce planning ensures these workers play a critical role in addressing fluctuating demand, special projects, or specific skill set requirements.

The Importance of Contingent Workforce Planning

• Flexibility and Scalability: Contingent workers provide the ability to scale labor up or down based on seasonal demands or market fluctuations, making contingent workforce planning essential for operational agility.

• Specialized Skills: They offer specialized skills for specific tasks or projects without the long-term commitment of full-time employees.

• Cost-Effectiveness: Employing contingent workers can be more cost-effective than hiring full-time staff, especially for short-term or seasonal needs, when supported by robust contingent workforce planning.

Managing the Contingent Workforce Ratio

The ratio of contingent workforce to total workforce is a crucial metric for understanding labor dynamics. Effective contingent workforce planning helps in strategic workforce planning and optimizing labor costs while ensuring operational efficiency.

Calculating the Ratio

The contingent workforce ratio can be calculated by dividing the number of contingent workers by the total number of workers, and multiplying by 100 to express it as a percentage:

Contingent Workforce Ratio= (Number of Contingent Workers/Total Workforce) ×100%

Strategies for Optimizing Contingent Workforce Management

Effective Integration with Core Teams

• Onboarding and Training: Ensure contingent workers receive proper onboarding and training to align with company processes and culture as part of your contingent workforce planning.

• Communication and Inclusion: Foster a culture of inclusion where contingent workers feel valued and integrated into the team.

Leveraging Technology for Management and Oversight

• Workforce Management Systems: Utilize advanced systems like SAP S/4 HANA or Oracle Fusion Cloud for efficient scheduling, tracking, and managing contingent labor.

• Data Analytics: Employ analytics to assess the impact of contingent labor on productivity and costs, facilitating informed contingent workforce planning and decision-making.

Strategic Workforce Planning

• Forecasting Labor Needs: Use predictive analytics to forecast labor requirements and plan the contingent workforce accordingly, a key step in contingent workforce planning.

• Balancing Ratio: Maintain an optimal balance between contingent and permanent staff to ensure operational agility without compromising stability.

Compliance and Legal Considerations

• Regulatory Adherence: Stay compliant with labor laws and regulations related to contingent workers, a critical aspect of contingent workforce planning.

• Contract Management: Ensure clear and legally sound contracts for contingent workers, defining roles, responsibilities, and compensation.

Build a Talent Pool

• Networking and Relationships: Develop a network of reliable contingent workers who can be engaged as needed through effective contingent workforce planning.

• Quality and Performance Tracking: Monitor and record the performance of contingent workers to build a pool of high-quality talent for future needs.

To facilitate smooth onboarding and management of contingent (contractor) workforce, leverage an advanced solution, specifically a mobile contractor management solution developed by Propel Apps, a leading supply chain transformation company. This solution simplifies and secures your contractor management lifecycle—from contractor onboarding to daily supervision and permit-to-work compliance. In other words, this solution centralizes approvals, automates documentation, and streamlines worker onboarding - all from a single platform.

This way, you can enjoy significant benefits that include:

• Enhanced compliance

• Greater cost savings

• Faster contractor readiness

• Enhanced safety and risk mitigation

• High transparency and control

• Data driven decision making

To learn more about this solution and how it can streamline and optimize your contingent workforce management, schedule a free demo with us.

Final Thoughts

Incorporating contingent workforce planning effectively into supply chain operations is crucial for maintaining flexibility, meeting variable demand, and accessing specialized skills. By strategically managing this dynamic workforce component, warehouse and supply chain managers can achieve a balance of agility and stability, ensuring operational efficiency and competitiveness in the market. Understanding and optimizing the contingent workforce to total workforce ratio through careful contingent workforce planning is not just a logistical necessity; it's a strategic imperative in today's rapidly changing business environment.