Your Organization and Your Managed Services Provider: Creating Value Beyond Negotiated Rates

Spend Matters welcomes a guest post from Lisa Leung of GEP.

Procurement organizations have a reputation for “beating up” its suppliers. This may be true for those one-time purchases, but when it comes to temporary staffing service providers, the category manager can be a valuable asset in identifying additional ways to lower this service category’s total cost of ownership.

Negotiating competitive billable rates for your organization’s contingent workforce is the first step in managing an organization’s temp labor spend. But what happens after initial savings from lower rates are realized? What can you do to extract additional efficiencies from the MSP?

Develop and manage the relationship. Your MSP is not just your vendor; they are your partner. By enabling 100% visibility to all levels and departments within your organization, the MSP can be ready to tackle the challenges of your organization as its staffing requirements evolve over time. By allowing the MSP to fully understand the organization’s operating requirements, the MSP can better ascertain areas that will drive the total cost of ownership down.

Streamline your worker types. The optimal MSP should be able to handle labor types beyond the traditional agency-provided staff. The MSP should work closely with the category manager to identify those workers that meet a number of your organization’s requirements, whether they be diversity-driven or statement-of-work driven needs. By being flexible in offering worker types beyond the traditional temp workers, the MSP can work with the category manager to reduce the number of hired resources as well as save time and effort in locating a smaller resource base.

Consider your MSP’s supplier relationships. Your MSP is only as good as its supplier network. The MSP should have a set of metrics that coincide with your organization’s requirements when determining a supplier network that matches your needs. Rather than simply adding or deleting suppliers based on these metrics, the MSP should use a continuous improvement program to guide its suppliers to meet or exceed your organization’s requirements. This creates an environment in which the MSP builds strong relationships with its suppliers based on clearly defined objectives. It also provides areas of improvement for lower-performing suppliers and a strong sense of partnership for high-performing suppliers. Working closely with your MSP to measure the performance of its supplier base ensures that your organization’s staffing needs are not met with high turnover and continual mediocrity.

Tackle rogue spend. Your MSP can only do so much without your help. By funneling spend to the MSP, your organization can capture all identified savings opportunities through the MSP’s negotiated rates. While the MSP will be a valuable asset in tracking your departments’ spend (or lack thereof), regular audits of budget requests and purchase orders can help tackle rogue spend before it happens. Engage noncompliant departments on a regular basis to identify the reasons why they are not using the MSP.

For more interesting thinking on procurement, visit the GEP Knowledge Portal.

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