Efficient Temporary Staffing Sourcing

Any sourcing project generally has 3 main objectives - Cost optimization, supplier reduction and compliance strengthening.

For any sourcing project, one can use a structured approach on the lines of DMAIC-Define, Measure, Analyse, Improve and Control, to ensure a sustainable solution is discovered and implemented for future.

Defining and measuring phase involves capturing current data, stakeholder collaboration, setting Objectives etc.

Analyse phase is the most important as it helps identify gaps in the current arrangements to get us thinking on possible solutions.  In this phase, we one start with as basic as 5W and 1H model- Why, Who, What, When, Where and How. It is to go deeper to explore potential areas of improvement which can then became foundation for the next phases.

 Some examples from an analysis phase for temporary staffing requirement are:

1) Why are we paying the agency?

Answer- Agency is recruiting and managing the payroll of Contractor staff. Recruitment is one time activity and Payroll is monthly recurring.

This insight is useful as mostly organizations pay as a % of salary which remains constant throughout the life of temporary staff.  One can leverage and formulate a new pay-out model to ensure that one time effort and cost is segregated. 

2) Who are we paying the fee for?

Answer- Temporary staffing requirement can be in different functions such as HR, Facilities, customer service, IT etc.

This is a useful information as effort required to recruit a candidate in niche jobs is much more. One can design 2 different pay-out matrices based on type of staff, thus avoiding cost leakages in paying same level of costs say for a Facilities contractor vis a vis an IT/Networks Engineer/ Project Director.

3) What is the break-up of cost?

Answer: Find out with spend analysis whether you are paying mark up on reimbursements.  Mark-up on reimbursements should be completely eliminated.

4) When are we making the payment?

Answer- There are two models prevalent in market i.e. ‘pay & claim’ and ‘claim & pay’. In pay and claim suppliers first disburse the staff salaries and then raise the invoice to clients. Claim & pay works just the opposite. Try and tweak it to get tangible commercial benefit.

5) How are we paying the agency?

Answer- Generally organizations pay % of Salary of staff. Suppliers have all the reason to share candidate profiles having higher salaries (so that suppliers get paid higher agency fees). It is akin to a scenario where a transporter is being paid on the basis of Kilometres travelled 'sans' any guidelines on route directions.  This insight can be  leveraged in framing a pay-out model wherein instead of Agency fees as % of salary, a flat fee is paid.

Analysing and improvement phases can run hand in hand through brainstorming sessions with business stakeholders.

Once a buyer realizes the gaps in  existing commercial model, it makes the job easy to design a more effective framework and commercial model.

Designing an efficient commercial model is followed by standard sourcing cycle - Approach Suppliers (Incumbents and new prospective market players), launch RFI, shortlist basis RFI and then conduct formal RFQ with the shortlisted suppliers.  Negotiations is most effectively done using reverse e-auction tool, the fastest and fairest tool for effective negotiations.

Control phase in sourcing can be to close a long term contract, ensure all requirements and clauses are captured and monitored timely.

So how are you dealing with this category in your organization?