Positions, perspectives and ideas evolve over time. People make decisions based on known information and sometimes unknown variables. Early on, managed service provider programs and vendor management system programs were formed on the assumption that the supplier couldn’t be trusted. As a procurement manager years ago, I encountered suppliers that charged up to 300% markup on clerical positions, which created a deep sense of mistrust. I know I was not alone.
In order to combat this mistrust, organizations brought in MSP and VMS programs to hold suppliers accountable and create competitive marketplace vendor-neutral solutions. For fear of suppliers unduly influencing hiring managers, no-contact rules were put in place. At the time, these programs valued response time as opposed to quality of performance and lowest cost as opposed to candidate success.
While this approach sometimes yielded near-term savings for many programs, it proved to be unsustainable. Candidate attrition, supplier response rates and end-user satisfaction often are casualties of this aggressive approach.
The market has begun to recognize this. While neutrality still needs to be incorporated in contracts and managed in a successful contingent workforce program, the trend today is collaboration rather than no-contact. And the drive toward collaboration is enabled by a more educated contingent workforce manager and more sophisticated MSP and VMS solutions being brought to bear. At the same time, many sophisticated buyers are looking to form strategic partnerships with fewer suppliers as opposed to selling their MSP with dozens. These successful relationships are based in a spirit of mutual accountability, transparency and shared success.
So what is the role of neutrality in a program and when should a buyer consider a more strategic relationship?
Neutrality works best when:
- the broad geographic reach is necessary, where no one supplier can be appropriately leveraged, neutrality is best.
- the ability to cast a wide net is needed to locate those hard-to-find skills.
- regional pricing is unknown in the competitive marketplace, a neutral scheme is a better bet to get getting to the market-appropriate pricing scheme.
- their MSP has a deep understanding of your needs and is able to articulate those needs appropriately to a wide variety of suppliers.
Sole-source and primary relationships work best when:
- you are working in concentrated geographies where the recording knowledge of your company and local talent availability can make a difference.
- you need to do a high volume of hires in a short period of time in situations like light industrial when casting a wide net to locate hard-to-find talent is not as important as the ability to source a bench of skilled candidates.
- you have highly defined and seasonal talent needs that predicate a strategic partnership where your master supplier can participate in scoping and planning for swings and demand.
- you have a relatively consistent and defined need for the same types of workers on a regular basis and can create appropriate cost transparency to the relationship.
While these rules of thumb are not always true, by questioning the knee-jerk response towards pure neutrality and considering more collaborative strategic approaches with the supplier, you can ensure that your program is set to succeed in the 21st century economy.