In this extremely competitive environment, companies like mine are looking to make efficiency improvements, optimisations and cost improvements for our contingent workforce programmes. And a crucial piece of the puzzle is having the right supplier base to achieve our goals and support our business.

Over the last two years, I have managed a global rollout of our MSP programme — one that involves approximately 50 countries and entailed merging two organisations, each with its own processes, tools, supplier bases, etc.

One of the key activities in the last 12 to 18 months was to merge, rationalise and optimise the supplier base to fit our organisational and business needs. Suppliers serving or wishing to serve programmes like mine should understand the thought processes and approaches of the programme team. Set up properly, supply base optimisation should be an “evergreen” process and not a one-off exercise. It includes:

  1. Supply-base rationalisation. This is a starting point. It means determining the right number of suppliers to cover required capabilities and geographical locations as per company need. We want to have enough suppliers, but not too many, to compete on each request. Ideally, we’d have at least three suppliers bidding on each req. Five is the ideal, and not more than eight to 10.
  2. Supplier performance measurement. Reduce the number of suppliers to the limit and focus the work with fewer suppliers to reduce management and maintenance costs.
  3. Process. Design and implement a process for regular review. Monitor and apply improvements as required and adapt the process to have continuous improvements to turn this into an ongoing process.

Of most interest to the supplier pool would be the rationalisation part of our process, which comprised several steps. For example, we reviewed all labor suppliers in use and considered their size based on our spend and headcount with them. We also took into account the suppliers’ geographical coverage as well as their capabilities — for example, are they niche providers with unique capabilities or do they have a wider range of capabilities? We took into account our own business needs and plans as well — would this be a one-off demand as per client project need or a longer-term or new offering capability?

Capabilities and geography. To review in more detail suppliers’ capabilities and geographical coverage, we developed a brief RFI questionnaire, in which suppliers listed the number of assignments they had with us, broken down by location.

Using all of the data collected, we grouped suppliers into three categories: strategic/gold, regular supplier/silver and supplier on probation/bronze. Bronze suppliers are reevaluated at the next quarterly supplier performance review, at which time they could be moved up a level or slated to be delisted upon the completion of their existing orders.

Based on that, we developed a maintenance and onboarding strategy.

  1. Leave the supplier in place and terminate at the end of the services if the project is no longer than six months.
  2. Onboard via payroll/umbrella supplier and sunset organically after services are completed.
  3. Onboard directly into the program. These suppliers (only) will be receiving new and future open requests for contingent labor. My hope is that providing our supplier rationalisation process can help inform your client interactions.

Going forward, regularly discuss with your MSP or client any issues that you may have with the client’s programme. Be prepared to address concerns that your clients raise and monitor your performance and delivery with the help of scorecards. Make sure you and the client are focusing on the right metrics and maintain a balance. Lastly, if your performance does not meet expectations, be prepared to work out an action plan.

As CWM has evolved and matured, you as suppliers also have numerous choices for whom you work. We want to make sure our optimisation process is fair and done right. You can help by providing honest and constructive feedback — and being open to the same from us.