I’m about to head home from an incredibly productive and inspiring week at Contingent Staffing 2016. The conference is vital to the workforce industry because procurement professionals are becoming more influential leaders in organizations of all kinds. Their roles are evolving beyond purchasing. These experts are taking on responsibilities that encompass business intelligence, talent analytics, growth strategies, risk and compliance, and much more. Leading procurement organizations are seeking new ways to extract more value from the global supply base, which includes establishing collaborative outsourcing and service acquisition strategies to replace traditional models that encourage zero-sum or win/lose scenarios. As a result, there will be a greater emphasis on forging and sustaining long-term supplier relationships.
Procurement and Staffing Suppliers Are Essential Business Allies
The power of the sharing economy, project-based work and complementary talent has changed the nature of employment. Contracted workers are no longer seen as temps for menial positions. They have grown to become integral members of the organizations they serve. Industry analysts estimate that 95-percent of employers view their contingent professionals as important contributors and staff. These individuals have chosen non-traditional employment to achieve flexibility and independence. They are skilled leaders and experts in their field. They’re also in demand, which puts added pressure on procurement leaders to partner with staffing providers who can deliver.
Staffing suppliers play a vital role in the ultimate success of an outsourced labor solution. With the talent they’ve vetted, selected and nurtured, staffing suppliers are the lifeblood of any thriving hiring program. Procurement teams that dedicate themselves to building mutually rewarding partnerships with suppliers will find themselves basking in praise for superior levels of performance, cost savings, quality and service. Here are some of best practices that elite procurement organizations can follow to keep their cherished business partners for the long haul.
Without a rationalized and consolidated vendor management process, suppliers don’t become integrated parts of the overall implementation and program maturity strategy. This can lead to inflated costs, a wide variance in markups, inefficient use of resources, bloated or insufficient numbers of vendors, and inconsistent performance. The value of supplier consolidation to procurement comes in the form of cost avoidance, sourcing standardization, compliance, improved visibility, enhanced reporting, and substantial reductions in rogue spend. A leaner, higher performing supplier population:
- Allows for the creation of vendor groups by specialization
- Reduces administrative costs and time
- Reduces overall operating costs through more effective spend monitoring
- Enables standardized rate card controls across the supply base
- Establishes universal terms, conditions and policies that can easily be enforced
However, challenges with supplier rationalization can arise when the focus centers purely on the number of vendors. In situations like these, the natural tendency is to find the smallest group of suppliers that claim to staff the widest volume of categories. And the unfortunate result is dilution. Think of the old saying, “Jack of all trades, master of none.” These suppliers may be competent in filling many skills, yet aren’t exceptional in any particular one.
A better approach is to create a right-sized pool of suppliers that specialize in specific job categories, regions and industries. And once an optimized supplier group has been developed — one based on performance and capabilities — forming long-term relationships with these staffing partners ensures prolonged success. Capturing and optimizing long-tail spend is a priority for procurement, especially in combatting scope creep and maverick spend. With a rationalized supplier population, it’s far easier to consolidate that spend across the right vendors.
Long Term Contracts
Long-term supplier contracts can yield tremendous benefits for procurement leaders and their own organizations. They drive up the value of the program, smooth demands, facilitate innovation through continuous improvement initiatives, and allow room for better forecasting and ongoing fulfillment. And procurement can reap the same rewards by treating their suppliers as business partners for the long haul. Establishing long-term agreements with the top suppliers in your pool can produce stellar results for existing and new engagements.
Specialists Surpass Generalists
Staffing partners who specialize in particular skill sets and job categories excel at placing the right candidates in those roles. Having honed their skills and cultivated their talent pools, they’ve mastered service delivery in core areas. And to some extent, this helps them standardize around a predictable set of services — a process that becomes more efficient and repeatable over time.
Generalists, who attempt to offer a broad array of workers, may not have the same level of competence that springs from the precision, learning experiences and repetition that specialists have developed. Instead, they may attempt to push nominally matched candidates into positions that require more than marginal fits.
Speedy Delivery and Attentive Service
When services are specialized, they also attain a level of standardization — which shouldn’t be confused with generalization. Staffing suppliers that offer a standardized suite of focused services are in a position to respond faster.
When you engage a specialist, you’re receiving a far greater level of expertise, streamlined processes, in-depth understanding of your objectives and needs, and personalized attention. In terms of staffing, a generalist must sometimes turn down requests or recommend them to another party. A generalist has more clients and more disparate work to juggle in terms of project management. And a harried generalist is more prone to making mistakes — something that could ultimately cost a lot more to fix than paying the sometimes higher rates a specialist charges. In the end, there’s no guarantee of quality, speed or cost savings.
When procurement secures specialized supplier partners in long-term contracts, they receive the complete assurance of stellar talent, with consistently superior metrics, at the most competitive rates.
Staffing partners whose practices cover specific categories and skills are not only faster to reach, they’re faster at addressing issues. As an example, let’s say XYZ Staffing has made its mark in the industry — and your program — as the top provider of legal professionals. The recruiters, sourcers and account managers are all trained to place and support legal talent. They understand every nuance of programs that require these workers, along with the needs of the talent and the expectations of business leaders. Not only that, they’ve focused their efforts on building a robust bench of active and passive candidates in those categories.
If a staffing emergency occurs, such as an unexpected vacancy, this supplier has the resources and expertise to fill those positions rapidly and efficiently, with pre-qualified talent.
Preventing Fires Instead of Putting Them Out
When an ongoing relationship has been established with a supplier, that partner becomes attuned to the program and procurement’s needs, oftentimes before they arise. The best staffing suppliers constantly study data from the engagement through HR analytics to forecast requirements, identify trends and anticipate demands. During the relationship, they also gain a sense of peaks and valleys over time, and how hiring managers react to them.
The result is a strategic mixture of perception and data-driven decision making. This level of foresight and familiarity empowers suppliers to stand in a state of readiness — they can visualize where and when issues could arise, and then take preventative steps to quash them before they manifest.
Retaining Your Staffing Experts
Staffing providers are compensated for more than a candidate’s pay rate; they’re paid for doing a great deal of work:
- The expenditures of time and effort from the staffing partner’s internal recruiters and supporting resources
- The type of workers being sought, particularly for niche positions
- The additional time to recruit specialized skills when a scarcity of qualified talent exists
- The geographic challenges associated with certain sites (e.g., locating highly experienced talent in rural markets with small, dispersed populations)
- The depth of screening required for compliance with the organization’s policies or regulations
All of these factors contribute to the variable costs incurred by suppliers. If a supplier’s remuneration is not commensurate with the requirements, the firm may not remain solvent in the context of the program, which could lead to turnover and potential business disruptions. Procurement can ensure competitive compensation by using market-based rate structures and fair markup controls. Suppliers can help by shedding complete visibility into the components of their bill rates (e.g., statutory costs, recruiting costs, etc.).
Staffing partners who feel a strong sense of unity with procurement will undertake the work with a greater understanding of expectations, objectives and insight to the client’s culture. They demonstrate superior performance metrics and adherence to SLAs. On the other hand, if these needs are not satisfied, even the most impassioned and compelling value proposition may not kindle a strong sense of engagement. Here are some ways procurement can help:
- Host forums or communications events with the purpose of conveying clear messages about business strategies, procurement needs, future directions, continuous improvement recommendations, innovations, goal attainment and more.
- Clearly define the company’s layered strategies — program drivers, visions, future missions and forecasts.
- Impart your perspectives on the partnership — how all teams can unite and work toward common ends.
- Review lessons learned, define ongoing prerequisites for success, discuss trends and share best practices.
- Develop a mutually agreed upon roadmap for strategic management processes as the program evolves.
Advocating Instead of Policing
It’s imperative that procurement leaders monitor rules and enforce compliance with policies. While some amount of policing is necessary, they don’t need to respond as police — showing up to diffuse a situation without really knowing the cause. Procurement teams with the highest engagement levels use supplier recognition, feedback and development as powerful motivators. Actively monitor program metrics, identify potential obstacles and keep staffing partners in the loop.
Procurement leaders must also hold their own teams accountable for their deliverables. By making corrections swiftly and openly, procurement can continue to energize the supplier base, remain in frank and close communication with staffing partners, and provide support. Suppliers will recognize these efforts and conduct business in the right way to meet all program needs. This approach prevents breakdowns and maximizes performance.
Long Term Supplier Relationships or Long-Lasting Success
By forging long-term relationships with top suppliers, procurement leaders can uncover and capitalize on cost savings opportunities, improved process efficiencies, unrivaled performance, faster turnarounds and more.
Engaging specialized, high-performing staffing suppliers for the long haul — as business partners, not merely vendors — also strengthens the value of the program for procurement, the company, the staffing firm and the talent.Business & Finance Articles on Business 2 Community