Tracing Contingent Labor Flow: Demand to Supply

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Creating a simple graphic to show labor supply types and how they flow through internal and external channels into a business is an exercise in futility – there’s nothing simple about it, regardless of how much one attempts to simplify the various labor, talent and process flow. But we had to at least try! The graphic below is as distilled a version we could create to cut through the complexity of supply and demand for various services (and services workers) “consumed” by the business.

Labor Supply Types Flow Through Many Internal/External Channels

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In this diagram, we illustrate that the contingent workforce value chain, like a materials-centric supply chains, is complex and requires a more holistic and rigorous management approach. For example, the chart explores the difference between the type of spend category (i.e., the type of service and service worker) and the type of services supplier. The former is an analog for purchased materials. In other words, some materials are truly unique (e.g., highly regulated) and strategic, while others are not.

The same logic applies to services. An interim CIO, or an on-site IT contractor with access to critical systems will require more rigorous management than a clerical temp. The correct strategy for selecting preferred suppliers, and how spend is managed internally, will then vary based on the nature of the services themselves.

In short, services procurement (and especially the management of external labor) is complicated – and the nuances are often hidden from the C-suite. One study participant said it’s a “huge issue everyone wants to ignore.”

This analysis is based on the Spend Matters research study, Applying Supply Chain Rigor to Contingent Workforce Management, which is available for limited period of time for free download, via the previous link, in the Spend Matters research library.

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