Subadhra Sriram's Blog

Master Supplier is the Comeback Kid

Rest in peace was the requiem earmarked for the master supplier model, having been dismissed by many industry veterans. But it has come back with a bang.

A decade ago the rise of the managed service provider (MSP) and the vendor neutrality phenomenon was slated to crush the master supplier model. And it did. But recent numbers have it rising from the ashes. In a just-published Staffing Industry Analysts survey of large contingent staffing buyers, it was reported that use of master suppliers as a primary supplier management model spiked over the last several years among buyers with spend in the less than $100 million range.  In particular, in 2013, 33 percent of buyers with CW programs of less than $20 million in spend used a master supplier as their primary supplier management model, up from just 12 percent in 2009; use also rose notably among buyers in the $20 million to $99 million spend range.

The numbers indicate that the master supplier model can work if done right. What the MSPs found through experience is that there are certain skill sets – light industrial and clerical – that are better handled by the master supplier. These master suppliers are getting direct requisitions and have the relationship with the client. The MSP manages the data and the invoicing process. Often the master supplier is on site working alongside the MSP. The MSP is still in charge – they hire the master suppliers.

“What has been established in the last decade is that it’s easier for a master supplier to fulfill certain specialized requirements than have it be a neutral bid every time clients need that resource, be it shift work or short-term needs,” says Kersten Buck, director, strategic solutions at SIA.

A quick glance at our lexicon may show some similarities between the two models, but the likenesses are quite superficial. The master supplier firm will always try to fill a client’s order (temporary workers), only turning to other suppliers if there is a gap that it cannot meet. Any MSP, on the other hand, is there to administer the program bringing the best resources including suppliers on board. Further, the MSP manages statement-of-work workers, independent contractors, compliance, invoicing, keeps the customer abreast of trends in the market place etc.  In the event the client is insistent on vendor neutrality, the MSP will not fulfill any orders.

Little wonder that across all different CW programs the MSP is the top choice for primary management model for many buyers of staffing services. Its elasticity in working with the different models that can best serve the customer has paid off for the master supplier model. At the end of the day, the market evolves according to the user’s needs. And if the master supplier model is filling a role efficiently and well under the aegis of the MSP, it will thrive.

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