SI Review: September 2013

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Straight Talk From the Customer: Into the Fold

How CW managers merge programs, incorporate suppliers following an acquisition

By Jan Urban

In the current, fast-moving and shifting environment of company mergers and acquisitions, contingent workforce managers have the continuous task of deciding whether to incorporate or exclude new suppliers into the acquiring company’s MSP/VMS program. Obviously, this is a challenge from any vantage point. Such situations are also a trial for suppliers, who may not understand what the client is going through. Here’s an inside look at the mindset of the client in these circumstances.

Limit growth. We want to keep our supplier base from growing too large when merging programs, so we try to work with the different lines of business to define a timeframe for these new supplier engagements. It’s either limited to the current contract labor until phase-out, end of assignment or end of project. We want to make sure we clarify that all suppliers in the program can bid on similar future requisitions.

Maintain motivation. To keep our suppliers from being alarmed at the increased competition and help them stay motivated, we want to maintain honesty and help them understand this is the standard mode of our business operations. We intend to give all incoming suppliers a period of time to prove themselves to remain in the program and hold them to the same supplier performance metrics (as others in the program). They may very well be placed in a lower tier for any future business candidate submittals until they have concluded their probationary period.

Contract negotiations. It can be difficult for us to handle contract negotiations with suppliers to the acquired entity, thereby stalling inclusion into the program. With all suppliers coming in, especially larger consulting firms that attempt to red-line any standard MSP/VMS contract, our goal is to secure the support of the different departments to engage these suppliers in the program right up front.

We explain to each department the benefits of compliance, roles, rates and responsibilities to market comparison and supplier performance measurement. The line of business can be critical in putting pressure on the supplier to comply with our program contracts and onboarding. So we turn to our suppliers to point out beneficial contract terms, such as the potential for future visibility to other similar contract positions or projects.

Supplier evaluation. To ensure that incoming independent suppliers have been evaluated under similar business compliance requirements and would qualify in our program, we work with our M&A and legal teams. Our goal is to have the new independent evaluated through our program before they come on board or have an exception policy in place that will allow a specified time frame to engage before our business compliance evaluation has to be completed.

Varying requirements. We’ll be discussing with the acquired business the previous business evaluation/ screening processes that may have been done before, because they may not comply with the new requirements in the new entity business environment. Suppliers to the acquired entity should be prepared to face new requirements.

Potential suppliers lists. We also want to keep suppliers that may have been initially excluded from our program, so we’ll review regularly any exceptions or exclusions that are engaged outside of the program at the onset of the acquisition. Quite often, though, what may have been determined as a temporary exception becomes an ongoing exception engagement. In these cases, we’ll maintain continuing communication with the lines of business that were granted a temporary exception in order not to let them slip outside our radar.

We’ll want to meet with these business units regularly to get an update on the exception supplier’s performance. Sample questions we’ll ask include: How is the engagement going? Are the contractor(s) performing well in the new incorporation? How is the service or project proceeding? Do they expect to complete the defined service/tasks/ milestones on time? When can you and the line of business get together with the supplier to start the contracting and onboarding process into your CWP?

We’ll be doing our due diligence to keep on top of changes in our CW program following a merger or acquisitions. While this puts a strain on our suppliers, those that emerge from it will have a stronger position with us going forward.

Jan Urban is global process Owner, CWP, Oracle

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