Supplier management and optimization are key elements in contingent workforce management, particularly as programs continue to advance and become more mature. As part of this, supplier scorecards are a useful tool that organizations use as part of their decision-making process when determining what supplier partners will best support their business.
These days, most contingent workforce programs that have a VMS in place have access to endless reporting and metrics. Many even use a separate platform that is integrated with the VMS to show those metrics in elaborate outputs. But what do these metrics all mean and do they truly provide value in assessing a supplier’s performance?
Consider the following when building out your supplier scorecard.
Getting started. Before you can effectively evaluate your suppliers’ performance, you need to define your strategy, identify a supplier governance team and have a plan. You need to identify what is most important to your organization — is it cost, compliance, efficiency or perhaps quality? — in order to know on what basis to conduct those evaluations.
Then, you can determine how to evaluate your suppliers and at what frequency. What is the right structure and model to support the scope and worker types of your contingent workforce program? Ensure your strategy supports the overall organization’s goals and objectives.
Balance. Scorecards are meant to be metric driven and objective. But what about the bigger picture? Too often, scorecards are so complex that they become weighted down and fail to tell the real story that can drive actions and real change. Are there trends? Specific areas of challenge? By focusing on balance not only in the metrics, but also in the delivery and discussions with your suppliers, suppliers will have a better path forward.
QECR. Focus on the Quality, Efficiency, Cost and Risk (QECR) framework. Evaluate and determine which metrics are going to holistically represent what you are trying to assess. What metrics are going to represent receiving the most qualified candidate, at the expected cost, and in a timely manner all while ensuring compliance and mitigating risk? Some key metrics to consider:
- Quality. Attrition, submit to hire, quality of deliverable, percent of awarded bids vs. responses
- Efficiency. Time to fill, time to submit, time to respond to bid
- Cost. Rate positioning, compliance to a rate card, rate audit results, deliverable planned or approved budget vs. actual spend
- Risk. Audit results
Comparisons. Suppliers will always ask how they compare to their competitors. So why not share how other suppliers are performing within the same marketplace? This can take on various forms, from sharing actual performance metrics to supplier rankings, but will often motivate and improve the competition and ultimately performance.
Goals. Set expectations and goals for your suppliers and evaluate accordingly. If your goal is to decrease cost, ensure those expectations are set for your suppliers and that the scorecard well represents a suppliers’ compliance to the expectations set forth. This will hold suppliers accountable.
Action Plan. When a suppliers’ performance does not meet expectations, require an action plan. If performance does not improve based on the action plan and within a specified timeframe, build in penalties, whether it be contractual (i.e., fees at risk) or process (i.e., removal from a primary tier/distribution), etc.