One Penny Impact
What the Penny Teaches Business about Contingent Workforce and Vendor Management Services
From its very creation, the strength of the United States drew from the dictum expressed on everything from its great seal down to its smallest coin. The penny tells us, “E Pluribus Unum.” Out of many, One. The individual talents, diversity, strengths and interests of the thirteen states achieved their highest purpose when united in one great nation.
What could this possibly have to do with complex business issues like Contingent Workforce Services (CWS) and Vendor Management Systems (VMS)?
Staffing an organization in today’s fast-changing business environment is more challenging than ever. Demand doesn’t just change year-to-year or quarter-to-quarter, the planning horizon is now often measured in weeks or days or shifts. Highly specialized requirements lead to a wide range of staffing and service providers. The very complexity of these topics and the potential for tangled relationships argues for a streamlining of processes, greater transparency and accountability. Yet even today, after an epic shakeout in the automobile and supplier industries, these needs often remain unmet.
The answer? Leave the old model of multiple, complex vendor relationships behind. One VMS partnership delivers the advantages and capabilities of multiple partners without the burden of in-house resources, complexity, and oversight. Yet all the benefits of established relationships and individual partner skills are preserved. As the penny tells us, make the transition from many points of contact to one solution provider.
“All I ever want is an unfair advantage.”
These words, or something much like them, have been attributed to people as varied as President Lyndon Johnson, Hank Greenberg of finance giant AIG, and any number of motivational speakers. An organization that successfully aligns its variable staffing needs and the many vendor relationships with its own industry dynamic quickly gains a business advantage. How unfair can that advantage be? Is 5% enough? Is 10%? Or is individual company potential even higher? Consider the challenges in the most basic model.
Managing contingent workforce needs can be daunting, even in simple organizations. A single plant may have a number of vendor relationships covering a range of specialized assignments. Purchasing Departments must manage multiple contracts, individual price structures and competing points of contact. Accounting has diverse invoices to reconcile. Management is challenged by the lack of transparency. And it’s all too common for risks like corporate compliance and fulfillment of supplier diversity goals to grow unchecked.
Now multiply this complexity to represent a multi-plant organization. The internal workload multiplies even faster than the number of vendor relationships. This consumes management time and resources to oversee processes outside the scope of an organization’s expertise. Yet control can slip away even faster.
For companies to benefit from the “unfair advantage” delivered by effective contingent workforce and vendor management services it pays to examine the status quo; the often unmeasured – and frequently immeasurable – spend on services.
Consider the impact on the Purchasing Department. Each vendor relationship requires its own “care and feeding.” Contract language, terms of trade, pricing structures, local requirements and variations, points of contact, contract renewals, economics, competitive bidding and more.
The burden does not end there. Accounting must reconcile scores, if not hundreds, of invoices; some weekly, others monthly, a few on a spot basis and still others that don’t relate to a current purchase order. Human Resources must control co-employment risks, prevent misuse of job classifications and stay on top of regulatory and enforcement practices. Hiring managers often see fill times growing even as candidate quality variability increases ramp-up time reduces productivity.
Management seeks, but cannot achieve, transparency on the contingent workforce spend. And who is looking out for risks associated with insurance, legal compliance, process integrity and internal/external certifications?
What’s missing? Control.
There was a time when a company’s competitiveness was measured by the depth of its resources, its pockets and its bench. While as true as ever today, the metrics are different. Complex organizations that rely on traditional practices to deal with staffing, contingent workforce needs and variable labor demand may no longer have effective control of costs, risks and productivity.
What’s really essential to an organization is maintaining control over operations, efficiencies and spend. It’s often far less important to develop in-house expertise in managing the intricate interrelationships between plants, suppliers and local needs. And when this expertise can be sourced with a singe point of contact, consolidating a wide range of challenges with an expert partner, the contracting company retains full control even as it reduces the need for internal resources that are not critical to its core mission.
Remember the Penny? Out of Many, One.
In an unpredictable business environment, control of contingent workforce staffing and vendor services is complex and growing more so. It’s an arena where the VMS concept may seem too good to be true. Yet it’s a reality achieved within – often well below – current spending levels. With reduced risk. While preserving critical vendor skills and capability. And with the transparency required by management.
Consider the intricate plant-by-plant vendor management task outlined above. Out of many relationships, create one solution. The transformation does more than simplify and streamline the organizational task. It delivers the unfair advantage suggested above. That typically amounts to a 10-20% savings and translates directly to bottom line improvement.
An effective CWS solution retains all the talents, diversity, strengths and capabilities of individual vendors while consolidating all of the administrative burdens and responsibilities in a single expert point of contact. Out of many, One.
The Process. Get it All.
There are six key elements that a VMS partner must deliver. The sum of the parts adds up to the unfair advantage a company gains by smart-sourcing in this environment.
- Cost Containment: An effective VMS solution will save money. That’s a bottom-line enhancement for any organization. If there’s no savings, look elsewhere. But if that’s all the partnership promises, it’s a foolish economy. Demand more.
- Risk Mitigation: Risk mitigation goes far beyond dealing with unfilled positions or poor quality candidates. A VMS partner must be the first line of defense on internal and external compliance matters, diversity requirements and even visa issues. Look for stringent audit capability and the tools to take on the regulatory burden.
- Workforce Efficiency: Successful companies prosper from internal expertise. One critical added value of a VMS partner is incremental knowledge and experience that can help streamline processes, relieve bottlenecks and instill a do-more-with-less philosophy.
- Sourcing Strategies: Where are all the good people? It’s the business of a VMS provider to know. Mining the traditional sources is just the start. Managing a wide range of suppliers and deploying industry-specific software tools provides a richer vein of talent, more choices and faster fill.
- Technology Optimization: The payoff is based on process transparency and visibility. Getting “plugged in” with industry-leading tools and resources results in greater control over staffing, spend, and all the data needed to drive more effective decision-making.
- Business Intelligence: No company operates in a vacuum. But when it comes to business intelligence, it may seem that way. Leading VMS providers have broad industry connections and scope. These assets help partner companies work smarter for less.
Picking Winners: What’s in it for me?
Manufacturers manufacture. Researchers research. Developers develop. None of these are specialists in VMS. Vendor Management Services expertise is difficult and inefficient to achieve internally. Yet every organization benefits from regaining control, tight cost management and transactional transparency, especially when it is achieved without the burden of detail-by-detail oversight.
Understanding who the winners are requires understanding the needs of each affected group in an organization. This entails answering the basic question: What’s in it for me? When each stakeholder gains oversight and control, while off-loading recurring and day-to-day administrative burden, it’s easy to see how a VMS program can gain acceptance at the working level.
The diagram below highlights the individual “wins” for key stakeholders.
One Partner: “From Req through Check”
The big picture in staffing a contingent workforce and managing multiple vendor relationships comes down to a few key verbs, a group of background processes and one overriding set of responsibilities.
First, the verbs: Source, Engage, Manage and Pay.
The illustration below shows these activities as a continuing cycle, repeating over time as long as an engagement lasts.
Backing up the four broad activities is the full range of support processes. These represent the staff work that an organization is spared through using a VMS provider. Think of this as the complete personnel management process, “from req through check.” The beauty of the process is the ability of a single partner to manage each step, relieving companies of resource-consuming burdens that detract from their areas of expertise.
Although relieved of the direct burden of staffing and vendor management, the company still retains a wide span of control. In fact, this is enhanced through actionable data on Measurement and Compliance. This date highlights not just how much is spent and saved, but where the spend occurs and where efficiencies can be realized; job-by-job, site-by-site, vendor-by-vendor. It’s exactly the information needed to further refine the process, sharpen the tools and drive business success. This comes full circle as another part of the unfair advantage that a VMS solution should deliver.
About Gonzalez Contingent Workforce Services
Gonzalez Contingent Workforce Services is part of the Gonzalez group, a major full-service supplier to the automotive, aerospace, defense and communications electronics industries. Gonzalez has been providing professionals to the business community since 1975, meeting a wide range of placement needs for assignment at facilities throughout the United States, Canada, Mexico, Brazil and anywhere our customers require assistance. The variety of staffing services provided includes Engineers, Designers, Technicians, Administrative, Skilled Trades, General Labor and many more.
Gonzalez, however, goes beyond a simple staffing provider. This reach includes mastery of industry-specific Vendor Management Services software solutions; not just one package, but many. This means Gonzalez can deploy a richer VMS toolbox than competitors locked into single-solution practices.
Gonzalez’ approach is characterized by its All-Around Precision™, a philosophy that assures customers of exacting fulfillment of their specific needs, throughout the complete cycle of staffing and VMS responsibilities. This is more than one-stop shopping. It’s a working model best described as an infinity loop where each step reinforces and compliments the others.