CWS 3.0: July 25, 2012

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Give Uncooperative Suppliers the Boot

I never cease to be surprised by the level of inherent distrust between many buyers and suppliers. This is most common when it comes to pricing strategies. I’ve talked with many buyers that are sincerely interested in putting together a world-class program, but are working in an environment with too many limitations. They are unable to identify key data elements of the program because they don’t have the VMS technology or an MSP relationship or any regular internal reporting mechanism to give them the visibility they need, forcing them to rely on information from their suppliers. 

For example, one buyer I recently spoke with — a very famous consumer brand — for the past year has been working to deploy a centralized procurement strategy as it relates to contingent labor. This client works in an environment that we often liken to the wild West: limited contractual visibility, inconsistent pricing strategies, poor headcount control and tracking, poorly written job descriptions — you name it. They’re interested in putting together a consolidated program but because they don’t know who is on site, what they’re being paid and how the bill rate relates to any existing contract, they are forced to rely on their supplier network for data. But here’s the frustrating thing: The suppliers won’t give it to them. I do not understand that logic. “We asked and they won’t give it to us,” is the response. I hear that more often than I like and can honestly say I consider that stupid supplier trick number one.

While the obvious reason to be against such supplier intransigence would be the old axiom that “those who have nothing to hide, hide nothing,” it’s a reality in today’s business climate that sometimes buyers of staffing services can be unduly aggressive with suppliers. Further, I am the first one to say that “cheap is expensive,” meaning that by focusing only on price ends up costing more in the long run. But the same time, I’m not interested in being raked over the coals from a pricing standpoint — I need to know what I’m paying for the resources I’m buying, not just bill rate, but the pay rate and markup, all those things that go in to a bill rate. I want to understand and be able to see how I can influence that rate to move up or down and see whether my suppliers are making an undue profit at my expense — or even if they’re not making enough.

I feel this partnership is a sign of an evolved supplier strategy. But in the case of the consumer brand customer whose providers were not willing to provide the requested data — what is the outcome that they expect to attain? Why on earth would I want to work with a supplier who’s not interested in cooperating with me? My recommendation to the program manager was that she make one more request to the suppliers in question and immediately sunset their engagement if nothing changed. She should find another supplier. If there is a strategic but uncooperative supplier you are unable to eliminate in the near term, you should develop a long-term strategy to get rid of them, because most suppliers are playing in the same pool and I can guarantee that those workers who are currently engaged through that supplier are more interested in working for you than for the staffing firm. So if it comes down to it, hire them directly and put them on a third-party payroll.

There are more than 9,000 staffing firms in the U.S. alone. If your suppliers aren’t interested in helping you succeed, trust me, you shouldn’t be working with them.

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