Managing Contingent and Services Procurement Better: Economics, Price Indexes and the Bottom Line

It's not too late to register for a live, SIG webinar I'll be participating in today titled: Pierce the Veil -- How to Use Market Pricing for Services Spend Intelligence. Along with IQNavigator's John Martin, I'll be discussing how procurement organizations can begin to think about managing contingent spending as the commodity it should be looked at, rather than a category of spend that is often carved out and managed in isolation. By taking a more economic and quantitative approach that factors in both internal and external price benchmarks -- including role-based pricing indexes into the services spend equation -- procurement organizations can transform how they drive contingent spending results. In the webinar, I'll first discuss some of the macroeconomic indicators that procurement organizations should track to better understand contingent labor markets including US GDP, BLS, ISM (non-manufacturing) and Conference Board reports. I'll then explore what this type of intelligence can tell us about where contingent wage trends and related benchmarks may be headed.

Consider, according to Conference Board data, that "35% of employers report that current staffs are smaller than pre-recession levels" and that "most anticipate no adjustments to staff levels in 2011". Of course this information came up before the latest downward GDP divisions for Q1 (showing a near recession), lackluster Q2 GDP numbers and the worst manufacturing PMI showing in years (more on yesterday's manufacturing PMI later this week). Now one might look at these numbers and believe the contingent market is suffering the same weakness as the regular hiring market with general, cross-region pressure and stagnation. But you'd be wrong, at least in terms of the wage trend index data that I'll be sharing with IQNavigator on the call. Still, there are some permanent trends that index data reflects, such as the continued movement offshore of certain classes of IT jobs, which have created contingent wage stagnation in certain job titles but not others.

Today, at 1:00 PM CDT, we'll attempt to bring analysis like this down to a more concrete level, including exploring how leveraging index data in developing contingent sourcing strategies and programs is the next logical extension of services procurement BI and analytics that goes beyond standard reporting. As such, wage price index data and broader macroeconomic trends can serve as a useful complement to analyzing compliance information, fill-rates, time-to-fill and related metrics to enhance program returns. Perhaps most important, the combination of such information can increase the overall emphasis on data-driven approaches and models to running services procurement programs and making decisions that are more quantitatively informed. After all, you would not manage a commodity such as transportation, steel, or resins based on "gut feel" and internal reporting data only. Why should contingent programs be any different? If you're as curious about the topic as I am, join me for Pierce the Veil -- How to Use Market Pricing for Services Spend Intelligence at 1:00 PM CT today.

If you'd like to learn more about this and related topics, you can also download our latest free Compass research paper on the topic: Services Procurement Innovation: Answering the Hard Questions -- Getting the Most From Analytics and Benchmarking.

Jason Busch

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