VMSA Live 2015 Pulls Up Stakes in Vegas, Contingent Workforce Suppliers Brace For Demanding Supply Chain Environment

Bucking up the supplier side was a clear focus on the final half-day of VMSA Live last week. The 2 and a half day conference is designed to bring together practitioners from all parts of the staffing supply chain (including enterprise contingent workforce programs, MSPs, VMSs, staffing suppliers of various kinds, and other supporting service and solution provides). While the prior 2 days of the conference modulated actual interaction and information exchange between the supplier and the enterprise sides of the staffing supply chain (aside: in 1 session, suppliers referred to MSPs as “The Colosseum”), Friday’s sessions aimed to provide undivided attention and a “thumbs-up” to the upstream businesses that do the bulk of the work to supply enterprises with their contingent workforce (temps and contractors) and talent-based project services (SOWs).

The final send-off of these staffing supplier gladiators included some truly insightful talks on strategic sales engagement of MSPs programs by Noorali Sonawalla (Sunrise Systems) and Paul Petersen (Aquent). But another presentation “Sourcing Candidates for SOW Projects vs. Staffing,” by Glen Cathey, SVP of talent acquisition of KForce, offered suppliers and enterprises a whole new level of insight into the increasingly important category SOW sourcing – and also raised some fundamental questions about where current staffing supply chain practices may be taking us.

Why is SOW Important For Staffing Suppliers (and Enterprises)?

Cathey – himself a Six Sigma aficionado – challenged his audience to an exercise in “5 Whys.” Why is SOW so desirable and important for staffing suppliers?

One of the main reasons was “speed vs. quality.” In the temporary staffing category with VMS, speed becomes the decisive success factor, but quality may (and often does) suffer. It’s one thing to deliver a body that – so to speak – merely fogs a mirror; it’s quite another thing to deliver the actual results that an enterprise is trying to achieve. As a speaker from supplier Zenith Talent pointed out: Businesses, in their contingent workforce strategies, are significantly shifting from being “talent-centric” to “results-centric.”

Operating in the fast expanding category of SOW, staffing suppliers are not driven to produce candidates “on-demand,” but rather have more of an opportunity to find and configure quality talent. However, in staff aug scenarios, pricing is often restricted by rate card or mark-up, imposing a “submit the best you can in the time that you have” regime (regardless of what the labor market price might be). In SOW, the market price of labor or talent is foundational – the SOW supplier will build a proposal based on the best talent they can find at the prevailing market price. The focus shifts to quality – putting together a competitive proposal that will be judged on a number of factors – but decisively on the supplier’s ability to execute and deliver the the final results specified.

The improved focus on quality in SOW (vs. VMS) is also supported by a different form of requisition process. In VMS staff aug, requisitions are often unclear and (particularly under time pressure in a communication vacuum) create conditions leading to high defect rates (specially when defects originate in the job orders). In the SOW process, the focus is on describing the results to be achieved (not the complicated characteristics of a job and the capabilities of a person who is supposed to fit into it and perform it with others). Moreover, in SOW, there is also opportunity to clarify what needs to be done ­– or at the very least back out of the proposal process.

vmsa 1

In addition to shifting the focus to delivering quality talent and outcomes, SOW has additional beneficial features for suppliers (and enterprises). Foremost among these is creating a superior candidate experience for talent – something that would likely create a positive feedback loop for suppliers (that, believe it or not, are supposed to function to attract and not repel talent). Accordingly, encouraging the flow of quality labor and talent into the supply chain seems like a system-wide benefit – not just one for suppliers.

Is it Really About SOW, or is About Something More?

One got the impression from Cathey’s talk that it was not just about SOW and suppliers (in fact, afterward he told me he wished there were more enterprise contingent workforce program practitioners around on the last day to hear his presentation and discuss it).

My own take on Cathey’s talk was that it was at least as much about how well the staffing supply chain functions today and why. Cathey, in my opinion, was not simply trying to lay out some of the positive and beneficial nature of talent services procured through the form of SOW. He was also suggesting how sourcing and “production” of talent services by staffing or workforce services suppliers can be structured/organized in different ways (with different incentives and tradeoffs, up and down the supply chain) to produce different results.

To simplify my assertion here, I could rephrase it by saying that “if the only tool you have is a hammer, then the only problem and solution is whacking a nail.” Achieving the optimal application of talent and obtaining enterprise results through a service supply chain may require an approach that looks carefully at the (potential) behaviors of all the subsystems involved. Rather than simply hammering away at the nail (my commentary, not Cathey’s) encouraging and supporting suppliers to use systematic approaches and analytical methods to find optimal operating models for delivering their services and meeting enterprise specifications may produce new, interesting and positive-yield results.

We are not talking about giving up control of the upstream suppliers that happen to be the sourcing firms and refiners of practically all of the critical contingent talent material, human components and assemblies, being delivered into our enterprises. What we are really talking about is driving sound supply chain management methods and practices into the supplier population and helping to give them the tools to optimize and innovate according to the principles we ourselves – as supply chain managers, not simply procurement managers – promote.

Suppliers are Supply Chain Partners, Not Gladiators

My initial thoughts on my first day at VMSA Live were – somewhat to my surprise, then – focused on the pressured and challenging position of staffing firms in the supply chain. The last day of the conference brought me full circle, as it was organized to support those harrowed, sometimes shell-shocked suppliers before sending them back to their battles with one another and their supply chain handlers – a destiny they seemed to approach with both determination and noticeable concern.

While at VMSA Live, I heard quite a number MSP and enterprise program management practitioners express their view that the businesses in the supply base had been compressed to point beyond which much more compression was not possible. Therefore, I wonder: What more can be done? What comes next?

Perhaps what needs to come next – considering, without hyperbole, even the possibility of labor supply chain performance declining under a continuation of current methods and practices – is a different approach to the supply chain as a whole, including (not marginalizing) suppliers most of all. This would be an approach that attempts to extend/convey sound supply chain management practices and tools to suppliers for them to apply – and even potentially innovate with – in their own operations and, yes, their own nested supply chains (that many contingent workforce procurement managers know – and perhaps care – very little about).

Among the different enterprise contingent workforce program/procurement managers I heard and talked with at VMSA Live, I definitely heard some voices that seemed to reflect a shift in attitude and thinking toward the whole supply chain and different approaches to it, though perhaps not quite that of reaching out all the way upstream to suppliers in the manner described.

Nonetheless, as demonstrated at VMSA Live, the supply chain is alive and kicking and full of intelligent, collaborative, open-minded professionals determined to make it work better. The age of gladiatorial contests and battles should be over – the time for a supply chain community of expert knowledge workers collaborating and sharing knowledge to create better performing solutions should be the order of the day going forward.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.