Supply Forecasting Methods

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Supply Forecasting Methods

Supply forecasting methods are used to estimate the existing number of employees within and outside an organisation. To estimate this existing workforce, an organisation considers various factors such as current resources, future availability and organisational objectives.

Just like demand forecasting methods, there are two types of supply forecasting methods:

  • Quantitative methods
  • Qualitative methods

Quantitative Methods for Supply Forecasting

There are three main quantitative methods to calculate the future availability of human resource in an organisation, as shown in Figure:

Markov Analysis

This method estimates the future supply of workforce in an organisation by using the historical flow rates of workforce. To prepare this historical data, workforce information for a period is collected and analysed. The Markov analysis method helps an organisation to estimate the likelihood of retention, transfer, termination, resignation, promotion and demotion of its employees. It also helps organisations to calculate future workforce flows based on the current data.

An organisation can successfully implement Markov analysis if there are sufficient employees in each job category and their nature of the job remains the same over a period.

Turnover Analysis

This method examines the rate of attrition and its past trends in an organisation. The rate of attrition is analysed by using the information collected from the exit interviews. The rate of labour turnover is calculated from the historical data of each job category, department and division.

Goal Programming

In this method, an organisation uses its resources properly to accomplish the goals of HR plans. The organisation evaluates the required employment pattern by considering various potential limitations, such as total salary budget and the maximum number of employees to be hired.

Qualitative Methods for Supply Forecasting

Qualitative methods for supply forecasting are used to estimate the short-term future availability of the workforce in an organisation. These methods are also used to enhance the estimations of workforce availability made by using quantitative methods.

Let us discuss these methods in detail.

Skill Inventory

In this method, HR managers evaluate the skills, competencies and career goals of the current employees in an organisation. Table shows an example of a skill inventory:

Name: ABC
Date: 25-09-2014
Employee ID Number: ABC-0072
Department Number: 03
DeveloperSQL, .NET, JAVAProgramming20042005ProgrammerINFY Private Limited
SpecialistSQL, .NET, technical project managementManaging a group of programmers20052007Team LeadCosco Pvt. Ltd.
Project ManagerProject
Managing and coordinating projects20072014Middle ManagerNCP
DegreeSpecialisationPassing YearCourseDateAIMA
2000Bachelor of Engineering2000KSTI Technical Institute
2003Master of
2003KME Institute
Example of a Skill Inventory
NET, SQL , JAVASenior Project ManagerDelhiReading
Microsoft Office and Microsoft ServerProgram ManagerMumbaiTrekking
Employee Signature: ________HRD:_______
Example of a Skill Inventory

Succession Planning

In this method, an organisation identifies the potential of employees; develops their knowledge, skills, and abilities; and promotes them to higher managerial level positions. This method ensures that employees are constantly developed and promoted to fill the needed role, as the organisation expands. There are five main steps in the succession planning process.

Replacement Charts

These charts estimate the workforce availability in each department by using the organisational structure or hierarchy. They list the current jobholders and identify possible replacements, should vacancies occur. Replacement charts are mostly used to anticipate the internal supply of workforce, particularly for managerial positions. Figure 2.9 shows an example of executive replacement chart in an organisation:

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