Who Cares About Vendor Neutrality?

What’s all the brouhaha about vendor neutrality? Historically, it didn’t exist. It’s a concept that evolved in the ’80s and ’90s. But today, customers do care about having a vendor neutral program. Here’s why. There is a fundamental lack of trust that many customers have for their suppliers. One explanation is that companies insist upon vendor neutrality due to their experience with program and staffing practices considered contrary to their best interests.

So what is vendor neutrality?

It’s a sourcing model that a company can adopt where all staffing suppliers are given an equal opportunity to fill each order; and/or suppliers are selected for each order based on the same criteria. And most important, the MSP or VMS provider cannot fulfill orders or push orders to any particular vendor.

And it’s not popular among the vendors running the programs. As one irate MSP said, if you hired Picasso, would you stop him from painting? 

(Staffing Industry Analysts and Brightfield strategies partnered to produce an in-depth report on MSPs and VMS, which discusses vendor neutrality. CWS Council members can access the report, 2010 VMS and MSP Supplier Competitive Landscape, here.)

But really, if suppliers have clear, comprehensive service agreements, a transparent pricing scheme with the right incentives for behavior, the end result will be happy customers. Who cares, then, if you are vendor neutral or not?

For more information on the pros and cons of vendor neutrality, end users of contingent labor can join me as I discuss the topic with Ed Hidalgo, senior director of staffing at Qualcomm, and Jason Ezratty, managing partner at Brightfield Strategies. The webinar takes place June 15th.

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Managing Partner

Julia Fournier 16/06/2011 8:22 pm

Not sure that a lot of people care about vendor neutrality, but I can assure you that I run into situations daily that demonstrate why we should. If a vendor stands to profit from a transaction and they are also running the program or directing spend to themselves the prospect of revenue outweighs what is in the client's best interests.

Neutrality pertaining to tool recommendations, vendor recommendations and or direction of requisitions and or spend to any vendor is critical to ensure the success of any program. Without it, it is a given that you are paying too much or one vendor is benefitting too much, and the health of your program isn't the priority.


VP - Marketing

Adam Gould 09/06/2011 4:09 pm

Vendor neutrality, like the application of other formal procurement policies and mechanisms in the acquisition and management of human capital, was conceived and implemented with the right intentions and for good reasons. The concept of neutrality itself is sound but the traditional approach, which seeks to achieve objectivity by eliminating relationship development between hiring managers and staffing suppliers, leaves much to be desired.

As vendor management technologies have evolved to include the ability to incorporate program specific business rules and track sophisticated metric sets, options for superior, more mature approaches to addressing the drivers behind vendor neutrality have emerged. A properly structured program can, and should, encourage relationship building between supplier and buyer personnel while simultaneously monitoring supplier performance along a number of dimensions. In fact, one of the largest US-based retail and commercial banking institutions recognized the importance of this “human element” in achieving its talent and service quality objectives and introduced a specific program performance criterion to encourage relationship building! That’s Vendor Management 2.0.

It’s an obvious reality that talent bears little resemblance to goods or services when it comes to complexity, potential benefit/risk, cost etc. Yet, organizations continue to apply principles in its sourcing, acquisition and management that were never intended to address the most critical determinant of success – human beings.

The larger issue, of which traditional vendor neutrality is a symptom, has the desire for short term gains at its heart. Unfortunately, the law of unintended consequences has manifested itself in our industry in the form of commoditization and depersonalization.

The game needs to change.


Mr

Ted Weyn 09/06/2011 2:30 pm

The MSP serves to normalize the market on behalf of its clients by using market-driven costs across a broad spectrum of suppliers to ensure the best service, at the best cost, at the right time. Why would a company who derives it's revenue, margins and thus it's profitability want to provide that standard in any market. Seems like they are cannibalizing their own margins.

I would stop Picasso from Painting if his work would continue to drive up costs to my company's shareholders. I believe this is an inaccurate analogy. It implies that the staffing MSP provides something unique, one of a kind and creative. When in fact, it is merely a business process outsource. The temps in any market are registered to multiple vendors, what is unique in what they are providing? The value of a neutral MSP should be directly associated to the client's savings and quality objectives. Non-neutral MSP's have always been and will continue to be a way for the staffing company to keep competition out and get more of the market. If they are positioned not to do that within the account, aren't they getting away from their core competency? Fulfillment of positions. It's a counter-intuitive business strategy.

You can read more in our white paper, Truly Neutral at http://bit.ly/lFGdCc

Looking forward to the debate.


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