DOW [INDEXDJX: .DJI]

In 2021 Dow, Inc. launched a vision to develop an enterprise-wide strategy and governance model to manage contract labor that would provide more visibility to the worker population, enhance worker management, and reduce overall external workforce risk to the organization. This would be enabled by a sustainable operating model and governance council heavily dependent on activating our Digital Dow IT strategy at its core. What made us different? We chose to design a system for the entire non-Dow contract labor workforce unlike most companies of our size who choose to start with a particular segment, namely contingent labor which is the easiest to measure and manage.

Dow knew focusing on that population alone would not yield the enterprise-level benefits we envisioned.

Traditional manufacturing companies, particularly chemical manufacturers, are complex and complicated on many levels. While we’ve operated safely and effectively solving the world’s problems for over 125 years, the world continues to demand more multi-dimensional solutions that drive our organization to evolve and grow in new ways. Much of this volatility and variability was exacerbated by the pandemic forcing companies to find solutions in their ecosystems instead of historical silos.

While we are experts in material science and chemical processes, we are also seriously focused on how data and technology link and activate all our people and systems to drive business results.

Define your ecosystem.

Dow chartered a cross-functional team to assess the current state of our contract labor management across the company. That team includes directors in human resources, manufacturing and engineering operations, integrated supply chain, procurement, IT, and others. Very quickly the team realized we had to leave our “functional hats” at the door and focus to understand the big Dow picture to create a new strategy.

  ​Dow chartered a cross-functional team of directors from human resources, manufacturing and engineering operations, integrated supply chain, procurement, IT, and other departments to assess the current state of contract labor management across the company.  

However, we always knew the critical role IT data and infrastructure would play throughout the journey. Our CIO, Melanie Kalmar was recently quoted in a Gartner Eureka! Video saying, “The digital transformation is really about how people do their work differently and understanding that the IT department won’t drive this on our own. This is a team sport and we needed everyone in the company engaged to drive the change that’s needed.”

We met with Dow leaders and experts who manage contract labor to understand their processes, pain points and desired solutions. We encountered dozens of home-grown digital management solutions with thousands of users and varying levels of success.

Soon we realized one of our most needed solutions would be a vendor management system built with the innovation and resilience to manage current and future contract labor data needs.

Easy to state, but hard to find.

And the journey begins.

Digital Enablement is the new “digital glue” that holds the ecosystem together.

Once you understand the people and processes being used, you can begin to reframe the future state of the data you need and how your technology systems should be enabled. In Dow, this will be achieved by establishing a vendor management system central to our data management needs. Taking this approach has not only gained credibility with the supporting functions but also helping to evolve IT's role as a thought partner during design and build much earlier in the design process. Staffing Industry Analysts, a world-leading staffing thought leadership organization, has researched and found 64% of vendor management system programs operate below optimum on a maturity scale, representing a tremendous untapped opportunity for the industry. Oftentimes this is because the full scope of people and process needs were not uncovered before designing and implementing the technology solution. Dow is doing this differently and already seeing benefits. This process requires a significant amount of decision-making that is addressed by the contract labor governance council, also a cross-functional team of executives and global directors representing their functions to prioritize needs and commit resources.

During our cross-functional assessment, we uncovered how people are attempting to use their data and realized either the data, systems, or approach were at varying levels of usefulness and relevancy.

People will simply continue to use what’s in front of them until you offer a better solution. Early on we saw how providing a holistic dashboard of spend across all the labor types, locations, service lines, and vendors were tremendously helpful in bringing more truth and understanding to the current state at higher levels in Dow. And yes, to accomplish this there is a significant amount of data validation and cleansing that happens in the background ripe for automation. As we now uncover the critical data elements, we need to evolve the strategy and operating model, we are also identifying data we no longer need and helping the organization find ways to refine and refocus their efforts and analysis.

Keep your ecosystem strong and resilient with priority established from the top.

The strategy and operating model you choose to manage approximately 10% of the spend portfolio, especially when it’s directly dependent upon the human workforce outside your direct control, clearly becomes critically important to the organization. Dow’s journey has been unique from the beginning in that our executive leadership team saw this opportunity to improve our operations and make us more competitive in the marketplace and immediately aligned to launch the team to realize the vision. For this reason, we’ve already accomplished in 18 months what it’s taken other organizations 5 to 7 years to do.

In most organizations, the creation of a contract labor strategy is more organic coming from the operational levels or some incident that has critical implications for the organization. Even in the early days, we knew contract labor management in the manufacturing industry is still a little bit of the wild, wild west. Companies do a great job managing their contract labor in-house and in regional or site pockets. However, as labor markets in this industry grow more unpredictable and required skills continue to increase there needs to be more of an industry response to aligning minimum data requirements to manage contract labor.

Suppliers tend to serve many companies in the same industry by providing expert workers that generally know the processes. Aligning industry terminology at a minimum would greatly advance longer value chain management and opportunities and reduce management costs for both companies and contract labor suppliers. We know this kind of next-generation, connectivity, enablement, and value creation can only happen with good data and enabling technology.