Effective Supplier Management Strategies for Your Contingent Workforce Program

The problem is that poor service can be isolated to a certain manager/recruiter, or it can be part of a greater company-wide issue. So having a relationship beyond the salesperson will be key for finding the “right” partner.

Having a great supplier strategy seems straightforward. You have the right suppliers that get you the right thing at the right cost when you need it. Yet, organizations have entire business units and teams dedicated to managing their suppliers. Consulting firms have entire practices that specialize in supplier management and strategy. If it was so easy, these teams and practices wouldn’t exist.?

When it comes to supplier management in a contingent workforce program, having an effective strategy is another one of the key attributes for a successful program. The strategy is designed to maximize supplier value, foster trust and performance-based relationships, meet talent requirements, and of course, ensure cost alignment.?In this article, I’ll touch on what client organizations and CW programs can do to elevate their CW supplier management strategy.

Client Organizations Need to do Better

No holding back in this article – buyers, you are a part of the problem why you’re not getting the most out of your suppliers. Here’s why:

1. Contingent workforce isn’t part of your talent strategy – To effectively articulate your talent needs, you need to have a holistic view of your workforce. This means planning on how you’ll use all your talent – including your contingent workers.
2. Contingent workforce isn’t prioritized – Combined with point #1 above, it’s hard to be thoughtful and have the right mix of suppliers when your CW program isn’t set up for success to enable you to build an appropriate strategy.
3. Clients need to actively participate in the decisions around suppliers – Often it's solely put on the MSP to manage the supply base the strategy around them. While the MSP (or internal PMO) needs to be more consultative and work with their client to truly understand the needs to be effective, the client also needs to come prepared with their needs (help them help you).
4. Establish clear criteria of your organization’s needs – Building on point #3, the supplier strategy can't be arbitrary, there needs to be a rhyme and reason behind requirements. If you want diversity suppliers, why? If you want suppliers in central Pennsylvania that provide Python developers and are fluent in Dothraki; that ok too (and I'm really intrigued)… so definitely explain the why on this one.

Unfortunately, when the above is not done, the supplier strategy is reactive, thus ineffective and done out of urgency instead. When you simply throw something at the wall to see what sticks, you’re relying on chance and have a dirty wall. Proper engagement in your supplier strategy requires discipline and forethought to ensure your organization is getting what they need, and your suppliers are set up for success.

The “Right” Supplier Partner

For each organization, the “right” supplier partner or the “right” supplier mix is very individual to their specific needs. What works well for one company likely won’t work for others, because their needs, markets, and skillsets are not exactly the same. It’s important that companies recognize they don’t need to look at other companies for comparison. They can validate their own experiences through data and performance.

Clients sometimes have supplier requirements like company size or managed spend.?These make sense because they're looking for trusted partners that have proven themselves. But outside of demonstrating that they’ve been able to have volume, what is it really telling us? I've seen some large name firms provide bottom tier service, which is surprising considering their reputation. So, relying on these metrics alone for who’s in/out of your program can be defeating.

Again, it comes back to your needs. Do you need niche supplier? Communicate that. Do you need certain markets? Communicate that. Ask your suppliers to provide backing data on how they’ve met those needs – not just high volume spend/volume, but specifics on how they currently meet those needs, and how they will do that for you. Ask to speak with the proposed account manager and a recruiter that will actually be providing you service. The problem is that poor service can be isolated to a certain manager/recruiter, or it can be part of a greater company-wide issue. So having a relationship beyond the salesperson will be key for finding the “right” partner.

Being the “Right” Partner to Your Supplier

To get what you need from even the best suppliers, enable them to provide their best service. MSPs and internal PMOs provide a great structure with the intention of mediating the relationship between the supplier and the engagement manager. One thing that has come from this is the no contact (supplier neutral) approach that forbids direct contact between the suppliers and the manager. When implementing this, clarify the reasons to both parties and assess whether it improves or worsens the situation. Try enabling a hybrid approach that provides a flexible engagement model based on each manager’s needs – if they want no contact, great; if they want direct supplier interaction, great as well. Provide guardrails that enable compliant behavior but don’t interfere or slow progress.

Additionally, some small things to do to help your suppliers are things like spotlight calls – for each requisition, put together a call between the manager and all suppliers to allows a broadcast question and answer session to enable a better understanding of the requirements. Furthermore, provide examples of what suppliers are doing well. Suppliers love hearing about their own successes and the successes of their competitors. This reinforces what they should be doing. Lastly, constant communication – keep them informed of changes within your organization. Have open and consistent communication so they’re apprised of upcoming changes and can anticipate changing needs.

Most importantly: from the very beginning, have clear supplier SLAs/KPIs. Set the expectation of what those are, why they’re important, and what are the consequences if they are not followed. Continue to revisit those with suppliers – constantly. The quarterly business review (QBR) isn’t going to cut it, and this needs to change. Suppliers need real-time performance feedback that is tied to their program performance.?Waiting three months to hear how they’re doing is far too reactive and doesn’t enable the dynamic ability to quickly implement change for improvements. Automation of supplier scorecards through technology should be utilized to provide live feedback and make necessary adjustments when performance falls short.

Closing Time

Managing your CW suppliers isn’t too hard… or is it; your mileage may vary based on many factors. Organizations often overlook the importance of strategic supplier management in a contingent workforce program and instead rely on reactive approaches. To improve supplier management, client organizations must take an active role in understanding their talent needs, prioritize contingent workforce strategies, actively participate in supplier decisions, and establish clear criteria for supplier selection. Furthermore, it is essential to establish strong partnerships with suppliers, focusing on individual needs and performance metrics rather than relying solely on company size or managed spend. By being a supportive and proactive partner to suppliers, organizations can foster better service delivery and ensure their needs are met. Constant communication, setting clear expectations, and providing real-time feedback are key elements in driving supplier performance and maintaining a successful supplier management strategy.

A simple article may not solve your problems outside of giving you some thoughts and possibly validating what you’re currently doing. But when you’re ready, CWM Strategies is here to be your neutral consultant to help you elevate your contingent workforce supplier management strategy.

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