If you’re already spending overhead on acquisition and planning, and you’re outsourcing execution as I advised in earlier posts, what happens when there aren’t as many people available to outsource due to the labor shortage?
An important point to remember is that supply chain problems aren’t your customer’s problem; they’re your problem. Sourcing workers and materials has to be a core competency, but it’s one that has suddenly become much harder to manage.
Don’t treat this as just another problem to solve, though. Look at this as a major value creation opportunity. Your supply chain problem could lead you to a way to thrive in the post-pandemic world.
Clarifying the Problem
Your operational capacity is sacred. Always keep that in mind. Your first-tier team creates capacity through planning. Their job is to secure the direct workers for seasonal projects.
When demand for capacity exceeds supply, you need your labor supply chain more than it needs you. If you try to increase your capacity by hiring full-time team for your seasonal projects, you will end up with lower profits.
The second and third tiers of your labor supply chain —freelancers, part-timers, and staffing/labor companies — are going to sell out of every bit of capacity they have. It’s up to you to plan ahead and secure that labor before it’s all booked up.
You can’t afford to take on a job only to find out you can’t hire the people to get the job done. That makes you look bad. When that kind of damage is done, it can take a long time to recoup.
Full-time vs. On-demand
Let’s say you run a live production company. How can you make sure you have a sufficient labor force after getting down the basic information about an upcoming event from a client?
The first step is to take a look at your team. In the pre-pandemic model, your event team probably consisted mostly of full-time (FT) staff. Most companies can no longer afford this mode of operation for a couple of reasons:
- The cost of labor is on the rise.
- The live event industry is seasonal.
What you need now is an on-demand (OD) workforce to supplement and support your smaller FT team. The two, when employed properly, complement each other.
OD workers are like the bench on a sports team. You call a player into the game based on the situation you’re faced with. Because of this, the bench requires diversity.
In other words, there’s more than one kind of OD worker.
Here’s a breakdown:
- The part-time worker (PT). You know this worker and have worked with them before. They fit one of your job descriptions, but you don’t have full-time work for them. They typically do not work with your competitor.
- The freelancer (FL). You may be familiar with this worker as well. They’re available any time, but only if you can secure them. If you treat FL workers well, they’ll make time to work for you. They might work with your competitors too.
- The business-to-business worker (B2B). You are not familiar with these workers. They are contracted through labor or staffing businesses.
Be aware that the labor shortage hasn’t just impacted FT workers. It has impacted the OD pool as well.
For example, PT workers may only be available to work weekends or weekdays. Maybe they can’t work the first week of each month, or after 3pm, etc.
FL workers are flourishing in the post-pandemic job market. They’re in high demand. You have to get to them before they’re already booked. This means planning ahead. Treat your FL pool well, and they will turn down other jobs to make space in their schedules for you.
The B2B pool is also in high demand. Businesses just like yours are requesting OD workers from this bucket. This means, once again, you must plan ahead. Staffing companies cannot afford to have people sitting on the bench waiting for your call.
In the pre-pandemic mode, you probably went to FL and B2B last. Post-pandemic, if you’re good at procurement (i.e., thinking ahead), consider going to these sources first. You have to book these workers before other businesses snatch up all their time. You’ll need a longer lead time to ensure you have the workers you need to get the job done.
3 Ways To Optimize a Limited Supply Chain
Don’t be victimized by your supply chain – or lack thereof. You can optimize your supply chain by planning ahead and securing labor early. Here are three ways to do that.
1. Plan Your Labor Ahead
High demand time periods need strategic solutions.
We can talk about the supply chain in three tiers according to their proximity to the company. Tier one is your full-time workers (FT), tier two includes your part-time (PT) and freelance (FL) labor, and tier three consists of labor from a staffing company (B2B).
The important point here is to know what your tiers are and when to activate each tier.
Imagine you know you’re going to be really busy the first two weeks of March (along with everyone else). Who will be the most difficult labor to secure?
Your tier one full-timers are available when you need them, and you already have some relationship with tier two.
In the current labor market, when demand is expected to be high, you need to pin down your B2B workers first. This will help you to be certain you can deliver what you promise to clients.
Putting down deposits for future labor might seem like a risk. What if the event cancels or changes?
The thing is, what if the event goes on as planned, and you can’t find the labor necessary to work it? If a deposit is required to book labor for a future event, it’s a calculated risk, and one that’s necessary in this highly competitive and limited labor market.
Tiers 1 and 2
Next, figure out the mix of PT and FL workers you’ll need and get them scheduled. They may prefer to work with you, but you don’t want to wait to book them until the last minute.
You can also use your FT employees as a type of quality control.
Say you have to hire a B2B worker to do an important job such as lead audio. But they don’t know you, and you don’t know them. Mitigate that risk by assigning one of your trusted tier one employees as the audio assistant.
The FT employee knows how your business operates, understands expectations, and is loyal. They’ll keep things on track or let you know if and when something is going sideways.
So if you know you’re going to be busy, tie up your third and second tiers ahead of time. You can count on the flexibility of your first tier, but you need to secure the second and third tiers before other companies snap them up instead.
2. Remember the Word ‘No’
In pre-pandemic times, many businesses always said Yes to new jobs because they could always hire more FT workers as needed. Post-pandemic is another ball game.
To protect and optimize your supply chain, you have to set limits and be prepared to say, No.
You can’t take on last-minute jobs like you used to because the labor supply chain isn’t as stable as it used to be. If you can’t source the workers, you can’t do the job. Be prepared to say No if you’re nearing your labor capacity or if a project won’t give you the time to secure adequate labor.
You might even have to learn to say No to some longer-term projects as well.
For example, if you have a client you’ve worked well with in the past and have reason to believe they’ll need your services at the end of March, consider turning down requests from new clients with smaller jobs for that time period.
When you say No to non-ideal work, you save some of your capacity for your best clients. To accomplish this, when you find that you’ve hit your capacity, it’s time to quit selling.
3. Always Be Building Your Bench
Be willing to try out new people in your second and third tiers. I call this kissing frogs — trying people out to see who will rise to the occasion.
Determine what newbies are capable of in a safe setting where a mishap won’t derail a project. Make sure the rest of your team has the capacity to absorb any shortcomings.
Remember that you’re not likely to have fully trained, vetted, and experienced workers just walk in off the street. But you don’t need that to build your bench. As long as there’s aptitude, you can train people to do the job at hand.
People with aptitude will have the ability to carry on adult conversations, make good judgment calls, and learn how to do the things that are valuable for your clients.
Don’t overcomplicate things. If you make building your bench hard, it will be. It doesn’t have to be. Keep it simple.
Use this blog as a guide to keep your supply chain in order. All you need is a shift in mindset, not an entirely new business plan.
It’s like the oxygen masks on a plane. If there are too many people sitting in a row, there aren’t enough oxygen masks in an emergency. One of the passengers will turn around and ask for a mask from a passenger in the next row.
The passenger in the next row does the same thing. And so on to the back of the plane. All that work doesn’t solve the problem. Someone at the back still doesn’t have a mask.
The best thing you can do is put on your own oxygen mask first. That way you have enough oxygen to think clearly. Then, instead of panicking, you figure out that you can share your oxygen with the person next to you. Problem solved.
If you know your tiers and when to activate them, remember to set limits, and continually build your bench, tough times won’t cause a panic because you’ll already be breathing easy.
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