Leveraging HR Analytics to Optimize Workforce Allocation in Inventory Management

The collection and analysis of high-quality data is central to the effective management of all modern organizations, especially those operating in highly competitive markets. At present, over 97% of modern companies invest in big data solutions, with the insights gleaned from these processes helping business leaders to optimize almost all aspects of their operations.

While there are many fields in which data analytics can be beneficial to modern businesses, in many cases, HR analytics can be among the most impactful. By collecting valuable data concerning how employees engage with essential processes, perform critical tasks, and find more efficient ways to work, HR leaders can dramatically improve core business practices.

To better understand the practical benefits of utilizing such information, below is a complete guide to leveraging HR analytics to optimize workforce allocation in inventory management.

What is HR Analytics?

HR analytics concerns any and all processes geared toward the collection, analysis, and leveraging of actionable information pertaining to an organization’s workforce. Sometimes called workforce analytics or people analytics, these collections of data and the eventual insights they produce help businesses make the most effective use of human resources.

High-quality and well-structured HR analytics can support businesses and their HR teams in optimizing a wide range of processes related to staff management, including factors such as: 

• Hiring: To identify good candidates more efficiently during the recruitment process.

• Training: To highlight skill gaps and connect staff to relevant training resources.

• Retention: To uncover reoccurring issues that likely contribute to staff turnover.

• Policy management: To visualize the actual impacts of organizational policies.

• Workforce allocation: To ensure resources are available when and where needed.

Optimizing Workforce Allocation Through HR Analytics

In simple terms, HR analytics benefit workforce allocation by providing management teams with high-quality insights into employee and process performance. By collecting and visualizing this data, those in charge of delegating tasks and allocating resources can optimize decision-making processes to ensure maximum functional efficiency.

To best understand the real benefits of HR data analytics deployed in the realm of workforce allocation, it’s important to learn the metrics involved in calculations, some examples include:

a) Early Turnover

This concerns the percentage of employees who leave the company within one year of being hired. Monitoring and analyzing this metric helps HR teams measure the efficacy of hiring practices and provides insight into talent requirements.

b) Performance

Performance metrics will vary depending on the business in question and the specific tasks being performed. Collecting high-quality data concerning how well new and existing workers are performing helps leaders refine training programs.

c) Engagement

Just because an employee is present doesn’t mean they’re engaged. Low engagement leads to performance issues, so it’s important to have a system like Workmates in place to help HR staff measure, analyze, and act on engagement data.

d) Revenue-per-employee

This metric offers insight into how well the organization is functioning as a whole. Revenue-per-employee is calculated by dividing total revenue by the number of employees in the business to gain some idea of general profitability.

e) Cost-per-hire

The analysis of this metric helps managers understand the real-world cost of approaching, hiring, and training new employees. Knowing this value can help to inform decisions regarding cost-effective ways to boost employee performance.

By developing programs to collect, monitor, and analyze metrics like those discussed above, HR personnel can allocate resources and manage organizational inventory more effectively. High-quality data insights enable managers to adjust schedules, budgets, training programs, and work processes in response to real-world conditions, optimizing workforce performance.

Implementing Analytics in Inventory Management

Through the monitoring of HR analytics, HR and management teams can optimize workforce planning supported by actionable performance data. Well-structured systems can be used to identify knowledge gaps, productivity trends, fluctuations in demand, and similar insights that can impact operations, helping to enhance scheduling and inventory management systems.

1. Identify Useful Analytics Processes

To effectively leverage HR analytics in inventory management, leaders must first identify which metrics and analytics processes will provide the most value to their organization. For teams working with manufactured and saleable resources, consider the below key metrics.

• Accuracy: The success and error rates associated with individual workers and their teams. Analysis of this data informs resource allocation and employee training plans.

• Productivity: Understanding how consistently employees are meeting performance targets can help leaders highlight bottlenecks and make informed staffing decisions. 

• Proficiency: Compiling a database containing records of qualifications each worker holds supports scheduling optimization and helps to maintain stable inventory levels.

• Demand forecasting: Comparisons between historical sales records and seasonal demand can be used to predict resource requirements and ensure inventory stability.

• Staffing requirements: Analysis of HR analytics pertaining to demand, supply chain data, and resource availability can be used to inform scheduling and hiring decisions.

2. Implement Data Collection Systems

Once management and HR teams have identified high-value metrics, systems will need to be developed to collect and organize data into digestible insights. Integrations between siloed attendance, scheduling, process monitoring, ordering, and inventory management systems should be pursued to ensure all types of valuable data are made easily accessible.

Within this unified data management system, HR analytics can be combined with other key metrics to help managers identify relationships between different processes. Here, valuable insights can be generated to optimize workforce allocation and resource management plans.

3. Define Key Performance Indicators

To effectively communicate gathered insights to relevant stakeholders, HR and management teams will need to define KPIs and set attainable values for workers to achieve. Appropriate KPIs will depend on the organization in question, as well as the purpose of chosen analytics processes. For inventory management purposes, the following KPIs should prove beneficial.

• Packing accuracy

• Stock-out rate

• Sell-through rate

• Cost-of-carry

• Shrinkage rate

If packing accuracy metrics are poor, for example, HR leaders may use this KPI to justify the allocation of more staff to packing operations. Similarly, poor stock-out rates may suggest additional training should be provided to staff in ordering and resource management roles, while shrinkage rate issues may help to justify adjustments to candidate screening practices.

4. Visualize Data Patterns and Trends

While those involved in the development and implementation of HR analytics and inventory management systems may understand how to discern valuable insights from collected data, wider stakeholders will likely struggle. To help communicate beneficial data insights to wider teams, efforts must be made to create visualizations detailing observed patterns and trends.

Effective visualizations are simple and easy to understand, presenting information in a form that highlights the issue, suggests a solution, and backs up that claim with relevant data. This process can be used to convince stakeholders that proposed optimizations will be beneficial.

5. Pursue Continuous Optimization 

Data collection, analysis, and management systems must be designed with longevity in mind, as the core benefit of these solutions is their ability to help HR teams and managers adjust operations in response to high-quality data. Processes should be developed to continuously review which KPIs are measured and how valuable insights are gleaned from resulting data.

Over time, systems developed and optimized in this way can be used to highlight trends and patterns in performance metrics over time, helping HR and management teams understand which of their decisions have provided the greatest benefits. As these systems become more ingrained in the business, HR analytics can be integrated into various wider organizational practices.

Summary

Big data is central to the success of most modern organizations, helping professionals make informed decisions about important processes faster and more effectively. By leveraging HR analytics to gain valuable insights into employee performance and productivity metrics, staff across all departments can benefit from clear, targeted, and effective workforce optimization.

Optimizing workforce allocation through HR analytics can help organizations to measurably improve inventory outcomes. By ensuring limited resources are appropriately distributed across key departments, businesses can mitigate stockouts, improve fulfillment speeds, reduce error rates and ultimately improve employee experience and customer satisfaction metrics.

Author:

This article is written by a marketing team member at HR Cloud. HR Cloud is a leading provider of proven HR solutions, including recruiting, onboarding, employee communications & engagement, and rewards & recognition. Our user-friendly software increases employee productivity, delivers time and cost savings, and minimizes compliance risk.