ISM Services Conference Update
I attended the annual Institute for Supply Management Services Conference this month in Phoenix. The theme of this year's event was “Innovative Supply Relationships: Creating Value for Services Procurement”. I had an opportunity to meet with many services procurement professionals across all industries and wanted to share what was top of mind concerning contingent workforce management in two buyer groups:
Companies without a contingent labor solution
For the companies we spoke with that did not have a comprehensive contingent labor management solution in place, most had determined that a VMS or VMS/MSP strategy was the right direction to pursue. The biggest questions they had were around how to proceed to the next step:
- How to create a business case to gain executive buy-in
- Establishing evaluation criteria for a VMS technology
- Determining the need for an MSP solution and how to evaluate the players
- How to execute a thorough, but targeted and cost effective RFP process
Companies with a contingent labor strategy
For the companies that did have a contingent labor management strategy, they were looking at how to strengthen and expand their program, add or enhance their VMS technology enablement and most of all look to bring in other categories of labor under strategic management. These companies were specifically interested in:
- How to move from a preferred vendor to an MSP model with a strong VMS foundation
- How to add a VMS technology solution to their existing preferred supplier, master vendor or MSP management solution
- How to move from a limited scope MSP for time and materials labor to a comprehensive contingent workforce outsourced management model enabled by a VMS technology
For this last point in particular, we had some very good conversations with buyers looking for ways to manage not only their time and materials spend, but to expand to Statement of Work/ Project/ Deliverables based spend. We published a Services Procurement Toolkit for this conference that addressed the service model and technology solution considerations along with benefits and savings for including the SOW spend category under strategic management. This content was well received and generated great questions and conversations with the conference attendees.
I got a lot out of all of the presentations throughout the conference, but there were two that really hit home with me:
Debbie Beavin, CPO of Humana presented on the power of Six Sigma in Procurement. I was impressed with the process and rigor that the Humana organization put around continuous process improvement. She not only outlined best practices, but laid out great case studies on real life examples that delivered value to her organization. At Provade, we live by this methodology everyday in terms of our service delivery and extension of our value, and it was great to hear about their approach in a broader context.
Kate Vitasek is faculty at the University of Tennessee in the Center of Executive Education and presented “Vested Outsourcing: 5 Rules that will Transform Outsourcing.” This presentation was taken from her book of the same title. Her entire presentation was forward thinking and very educational. The Pricing/ Value approach she discussed is very relevant to Contingent Labor Outsourcing :
- Buying results instead of tasks or activities with incentives toward innovation
- Using incentives to achieve mutual “trade-ups” vs. conventional cost/ service tradeoffs
- Focus on outcome based vs. transaction based business models (What NOT the How)
I believe the VMS and MSP industries can learn from this and adopt “what not how” value measurement recommendations, risk and reward re-evaluation and overall technology and service success measurement frameworks.
Overall, I found the ISM conference a great opportunity to network with services procurement professionals from a broad range of industries. I look forward to applying these ideas to my customer engagements and to attending the event again next year.
By Kate Dyer, Strategic Accounts
As a marketer, I am accustomed to identifying marketing agencies and vendors that can meet my needs for outsourced and specialized projects and campaign execution. I am used to structuring the expectations for deliverables and negotiating pricing. I have relationships with providers I trust to meet my needs.
I involve Procurement to document what has already been agreed via email and Statement of Work (SOW) drafts or help to facilitate an RFP. I count on them to ensure we have the appropriate legal documentation in place to protect the company. If Procurement told me they wanted to get involved in identifying marketing agencies and structuring pricing, I would be skeptical about the value they could add to that part of the process.
But… recent economic conditions have forced me to be more cost-conscious than ever. And I am always stretching to find creative ways to do more with less. So if it could take cost out of the business – and out of my budget specifically – I think I could reconsider how I manage my external service suppliers. Even better if my trusted providers can be creative in submitting proposals and delivering high-quality service.
Marketing is one functional area that spends a significant amount of their budget on project-based services. (And we would always like to spend more!) Think about the spend in the service category for all of the support functions in your business – from legal to IT to finance, they all use outside providers to get work done. Much of the work is done via SOW to avoid headcount limits or tenure rules, or because the supplier/consultant/agency insists on this model because they can be less transparent with pricing, or because it’s faster and easier to execute this type of paperwork and circumvent your contingent labor process. So the process is often inefficient and expensive.
My colleague Peter recently blogged about SOW best practices and leveraging Vendor Management Systems (VMS) to standardize the process, improve quality and generate cost savings (here and here). Inspired by his posts and how Provade VMS has helped our customers take cost out of their services spend, I did some research and packaged a toolkit to help you get started in managing your SOW spend. It takes into account the stakeholders (like those pesky marketing people) you will need to win over in order to make your initiative successful… offering tips and advice for every step of the process. You can access the toolkit here.
So, download the document and get thinking. Then get started. Leave comments under this post - I would appreciate your feedback!