The suppliers within the workforce solutions ecosystem — from vendor management systems and managed service providers to staffing partners — provide a highly valuable and essential function that enables the end clients to be competitive in their chosen markets. So surely, such a purchase should be financed appropriately if everyone is to benefit.
Yet over the last 30 years, the staffing industry has witnessed a “race to the bottom,” with buyers’ intense focus on cost leading firms to participate in reverse auctions and supplier-funded models that give many buyers the impression they are getting something for free — or at worst at a low and competitive price.
This relentless focus on cost may have been justified in the beginning, when there was really no control and many parties in the supply chain established profit margins that bordered on extortion. But something is changing — and it’s changing significantly.
SIA Survey. According to our upcoming 2019 Workforce Solutions Buyer Survey for the Americas, providers’ Net Promoter Scores have swung to the negative, with primary staffing suppliers’ NPS dropping to -17 from 5, VMS providers to -12 from 4 and MSPs to -3 from 5.
A race to the bottom, indeed.
Some would argue that those scores reflect the fact that buyers are not getting what they paid for, while others would argue that, in fact, they are!
The fact of the matter is that these NPS scores reflect the situation that buying organizations are not happy with their purchases and surely this situation is not sustainable.
Even if some providers see higher scores when asking their own customers for an NPS score directly, the scores provided to SIA in its independent research should be of concern to all within the ecosystem — those that procure the service and those that are ultimately selected to deliver it.
Paying for value. Buyers and providers must focus more on value if this downward trend is to be reversed.
All parties in the supply chain should avoid apportioning blame and engage in proactive collaboration to understand why this is happening, especially where organizational competitiveness is being impacted.
Maybe we spend our own money differently from how we spend the company’s money. When buying a house or a car, for example, we are more willing to pay for value — and are more selective in what we compromise on when what we can afford falls short of our dreams.
When we look at the project triangle of cost, quality and time, each dimension affects the others. If we want high quality at low cost, then we cannot have it quickly. If we want high quality and we want it quickly, then it will not be cheap. And if we want it quickly and we want it cheap, then we are going to have to compromise on quality.
I believe that there is an equilateral triangle option to be found where all parties are satisfied in equal measure; however this will require a fundamental change in what is currently considered acceptable across these three dimensions.