“If you don’t grow, you die.”
I have heard these words many times over my 18-year career at Southwest Airlines. They have been a mantra of sorts for Herb Keller, our founder and CEO Emeritus. He would say them often when reminding us that we must change and evolve as an airline in order to beat out the competition and continue to be successful and profitable. Just as the words have proven true for running our airline, they can be applied to the long-term viability of a contingent workforce program. Successful programs are ones that constantly learn, grow and evolve over time.
While we have been able to achieve the initial goals of launching our program (i.e., establish a centralized team to manage all contingent labor, one point of access for contract workers and improved worker quality), we are constantly looking for new ways to add value to our customers and suppliers. Our program was built on three pillars: quality, cost and efficiency. By focusing on quality, and keeping the Southwest Airlines low-cost model in mind, we have positioned ourselves as a strategic partner to the business, to our suppliers and ultimately to the customers who fly on our planes.
Last year, the Southwest Airlines contingent workforce program went through a substantial renovation process, evaluating its current state, as well as projecting future needs. This was a coordinated effort between three internal groups: our people department, technology vendor management office and supply chain management (procurement). The objectives of this exercise were aligned with Southwest Airlines’ goals pertaining to cost, performance and partnership, which eventually led to a revamped program that we dubbed SWAStaffers 2.0.
Throughout this exercise, we were mindful of our partners and how they may be affected by any changes to our program. Because of that, our staffing partners were central to the rehab effort. In fact, we invited our entire staff augmentation supply base to attend a town hall kickoff meeting where we outlined the initiative, discussed program impact and explained how we planned to partner with them throughout the effort. Further, we asked our suppliers to come along with us as we evolve and strengthen not only our program, but our partnerships as well.
The revamp. The program relaunch included several new initiatives, such as increasing our tier of volume discounts, adding tenure discounts (SWA currently has a 36-month tenure policy) — as well as reviewing every active assignment per supplier. In many cases, we had to realign with our partners on markup percentages and put a few new parameters in place regarding acceptable rates or markups. We also reduced our supply base to nine from 14. This entire exercise proved to be beneficial for both SWA and our remaining suppliers. For example, reducing our supplier list provides them more opportunities to make placements. We started doing more “bulk-buying,” which enables the suppliers to fill multiple positions at one time versus only one role per requisition. The benefit to Southwest Airlines was notable in terms of cost savings as well as a renewed focus on our partnership with a handful of suppliers.
More than lip service. We have a strong history with our supplier base, and have been proud of our existing program. So it made sense to include our providers as we worked on this upgrade. All of our suppliers participated and provided feedback along the way. They let us know what we had been doing well, what didn’t work so well, and what else they have seen in the marketplace that could benefit Southwest Airlines and our contingent workforce program.
And we listened! For example, the practice of bulk-buying was a suggestion made by one of our partners and has already proven to be a valuable addition to our program.
Overall, the program revamp was a success due to strong relationships with our suppliers, the transparency we showed throughout the process, and a genuine respect for the Southwest Airlines brand. Now that 2019 is well underway, we will continue to live by the words of our great founder — we will grow and evolve alongside our partners.