|RTM Consulting introduced Just-in-Time Resourcing® solutions to help companies with the complex task of getting the right person in the right place at the right time. Just-in-Time Resourcing® is our brand for human capital management services. We help companies build the right set of capabilities to accomplish the most efficient use of human capital for professional, consulting and shared services operations.
Roughly thirty years ago the manufacturing industry embarked on a journey to transform itself from a carryover of the industrial revolution to more efficient ways of creating products using modern technology. This included the introduction of robotic gear to replace manual labor tasks with technology that could perform the same work at a lower cost, and with higher and more predictable quality. The industry also began to understand that it needed to find ways to eliminate the cost associated with idle inventory, and lower lost opportunity costs due to short supply of parts when a peak in demand occurred. This was the beginning of what became known as just-in-time manufacturing, whereby parts are predictably supplied at precisely the time needed and timed to always changing demand forecasts.
The consulting and professional services industry remarkably finds itself in a similar state as the manufacturing industry was in thirty years ago. Simply said, processes, methods and tools have failed to keep pace with the large disruptions in traditional labor sourcing and management methods. Off-shoring, near-shoring, globalization, price pressures, increasing competition – all things we read about and deal with every day have changed the way we manage labor. Unfortunately too many companies have responded with stop gap and tactical measures, in many cases compounding the problem or delaying the inevitable need for real process change.
The Business Imperative for Highly Effective Resource Management
Over the next decade growing competition and marketplace change will continue putting unprecedented pressure on service providers to rapidly adapt and innovate in every facet of service delivery. Effectively and efficiently sourcing and managing resources will be the new high water mark for the industry. Similar to how manufacturers learned through advanced inventory planning techniques to have the right parts available at just the right time, services providers are now challenged to provide the right resources at the right place just-in-time.
Interestingly, most professional services providers today struggling with utilization problems and resulting high labor cost, have reacted by pushing labor off-shore to lower average hourly labor costs. While off-shoring is certainly a desirable and necessary part of the strategic labor equation, implementing better demand forecasting techniques is necessary to address the strategic need for sustainable business transformation.
Analogous to targeting near zero inventory for a manufacturer, professional services providers should target constant full billable utilization of on-board resources. The following table illustrates the economic value of efficient management of utilization.
|# of Billable resources at $150/Hr.
||Annual Revenue ($) from 1% Increase in Utilization
||Annual Revenue ($) from 7.5% Increase in Utilization
||Annual Revenue($) from 15% Increase in Utilization
Since idle resources are a sunk cost, the revenue amounts in the table drop straight to the bottom line as profit.
Go to our White Papers for more information on our Just-in-Time Resourcing® brand of solutions. Try Our New Utilization Calculator to See How Improving Utilization Will Increase Your Bottom Line by clicking here.
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