Boosting Supply Chain Efficiency with Human Economics

As a supply chain leader, you may tend to prioritize efficiency. From improving the quality of technology within your organization to building richer, more reliable supply chain relationships, you must look for every opportunity to streamline operations.

But there’s one element of the supply chain that’s often neglected in the pursuit of efficiency: human economics. Managing and fostering a thriving workforce is a vital part of ensuring a maximally productive supply chain.

We’re going to dive into what defines human economics and what optimal human economics can do for your organization. We’ll also look at a few action steps you and your team can take to achieve a happier, more efficient and productive workforce.

What Is Human Economics in Supply Chain Management?

Human economics sheds light on the human element of the supply chain. It’s an umbrella term that covers a few different aspects, including:

  • Labor economics – wages, skilled worker acquisition, and labor market dynamics
  • Human capital development – training, career development, and long-term employee engagement
  • Workforce management – health and safety, work-life balance, and day-to-day people management
  • Employee engagement – motivation, community, and company culture

Excellent supply chain management emphasizes driving high levels of productivity in a sustainable way. People who are experiencing the positive consequences of good human economics, such as fair management, a safe workplace, and equitable wages, are more productive.

Not to mention, employees who are trained effectively can get to producing high-quality work much faster than those who are left to their own devices. And when continuing education is introduced in organizations, employees are given even more opportunities to optimize company practices.

How Do You Improve Human Economics Within Your Supply Chain Organization?

Now that you know the benefits, let’s take a look at a few ways you can improve the quality of your own organization’s human economics.

Emphasize Good Mental Health

When employees feel good, they do good work. Placing team members’ mental health is a great foundation for boosting overall human economics. Here are a few ways to elevate your employees’ mental health within your organization.

  1. Facilitate collaboration

When teams are encouraged to collaborate with one another, rather than compete, they experience lower levels of anxiety. You also benefit from improved quality of ideas due to an open, constructive, and collaborative environment.

  1. Value inclusivity

An emphasis on inclusion results in teams that are 35% more productive. And they’re not only more productive — they’re happier, too.

However, it’s important to extend inclusivity beyond hiring practices and integrate this value into the core of your operating approach. Inclusivity means meeting each of your employees where they are, which varies when your backgrounds are diverse.

For example, we know that employees of different ages have different approaches to technology. Younger generations have little to no patience for lackluster user interfaces, while older generations need intuitive tools with excellent training. Incorporating technology to support your employees — regardless of their diverse backgrounds — is a vital application of inclusivity.

  1. Incorporate a flexible environment

Instituting a flexible work environment is a great way to lower turnover. In fact, 45% of employees left their jobs in 2021 due to a lack of flexibility. A flexible work environment directly impacts employee experience and engagement levels, so it’s worthwhile to consider how your organization can implement more flexibility.

Consider incorporating a cloud-based solution so your employees can have more flexibility in their work location. Logility’s cloud-based tools let your team access important information from anywhere so your team can work flexibly without compromising on collaboration or quality.

Provide Transparent Access to Information

It’s extremely difficult for organizations to achieve productivity and company alignment when important company information isn’t transparent. Two types of transparency are necessary for your team: improving alignment and spurring employee success.

Company Knowledge

Sharing business knowledge transparently is a major tool for aligning your organization company wide. When employees only have access to limited metrics and goals, it’s common to end up with departmental clashes and bottlenecks.

However, when team members have access to goals, trends, plans, and data from across the company, they can make decisions that drive progress across the entire organization. Supply chain management is inherently cross-functional, so your teams need company-wide insights. With Logility’s GenAI solution you democratize information across your organization, ultimately improving decision making.

Tribal Knowledge

What’s often overlooked is the vital need to document and distribute tribal knowledge. Tribal knowledge within organizations refers to the cultural knowledge that is often unspoken and undocumented — what casual Friday really means, how much personal talk occurs between team members, and so on. For your supply chain, it could be knowing which suppliers you can call in favors for quick turn arounds or how decisions have been made to adjust your forecasts.

When new employees join your team, documented tribal knowledge sets them up for success. Sit down with team members, identify the cultural rules of your organization, and document them clearly. Educating new hires and aligning teams on tribal knowledge diffuses conflict and can increase retention levels. This can expand into your supply chain practices using Logility’s Decision Command Center to create, manage, and track decisions for key processes and reference them later on. Especially when there may not be a human that can take the time to pass on their knowledge to new talent.

Equitable Treatment

A prerequisite to any positive workplace is equitable, fair treatment of all people participating in your organization at any level. This includes:

  • Respect in management practices
  • Good wages
  • Workplace safety

When team members are treated with equity and respect, 74% say they perform better. Respect rears results.

Defined Company Values

A last important way to ensure you’re using your human resources most efficiently is by holding your company to a standard of values that ensures optimal utilization.

Some of these company values include innovation, respect, collaboration, transparency, equity, and diversity. Talk with your team about values that are important to creating an optimal work environment.

At Logility, our values include accountability, passion, curiosity, teamwork, awareness, honesty, integrity, diversity, flexibility, and adaptability. Our team consistently sets high standards and goals built on insatiable curiosity and desire for continuous improvement.

The Result: Dynamic Labor Pools

The result of these things is a dynamic labor pool. According to Gartner, Inc’s Supply Chain Executive Report: Future of Supply Chain 2024, dynamic labor pool is a company of employees that vary in skills and knowledge systems but work together in a cohesive, collaborative manner. Great human economics creates this sort of environment, boosting engagement, retention, and supply chain efficiency.

How Logility Improved Human Economics for Clarios

As the largest producer of car batteries in the world, Clarios is a high-impact enterprise with a team of over 15,000 employees. To effectively thrive, Clarios has put into practice the elements of great human economics.

While this organization uses many of Logility’s capabilities, one major way Logility has unlocked Clarios’ human economics potential is by simplifying the onboarding process for new hires.

Logility’s platform is easy to use and quick to train on, so Clarios’ newest employees are using the technology in only a few days. Their staff members feel supportive and productive and are proficient on the platform within 30 to 60 days.

When employees have the tools they need to perform well, your entire business can thrive. Taking care of your people means taking care of your business.

To learn more about how you can increase your organization’s productivity and make it easier for your team to succeed, schedule a chat with our team.

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