Supplier Relationship Management (SRM) refers to the interaction and management of vendors that provide materials, components and services to an organization. In today’s scale-driven economy, supplier relationships are essential to an organization’s competitiveness and profitability. More than ever before, organizations need strong relationships with their suppliers to improve quality, reduce costs and develop new products faster than their competitors. Maintaining these relationships is a joint effort between procurement, the business unit and suppliers. It is not always easy to build relationships, or to choose suppliers that are cost-efficient and easy to work with. Using a strategic approach instead of a reactive approach, however, will ultimately bring in the best results for the business.
An unpleasant situation can occur anywhere and at any time, irrespective of how reliable the supplier is. When it comes to the procurement of contingent workers, issues that may occur may include:
- Submittal of candidates that do not meet the minimum requirements of a position
- Candidates submitted above market rates without justification
- Declined interviews or offers because of poor candidate vetting
- Lack of candidate submittals to the organization’s job postings
- Workers starting assignments without clearing the pre-employment screenings
- Timesheet falsifications or violations of company policy
- Workers quitting without notice
- Lack of visibility when it comes to spend
It is a lot faster and easier to resolve issues if there is an established relationship between the vendor and the organization that uses its services. A reactive approach will consume a lot of time and resources which ultimately could have been spent on other business processes.
What are the elements of a strategic approach? To start, what businesses often oversee is that relationship management begins even before the agreement with the supplier gets signed. If the expectation is that the business wants low pricing but no value, and that the organization is doing the supplier a “favor” by allowing them to participate in the supply chain, then the relationship will never be meaningful. Staffing suppliers are not just vendors; they can be true partners that understand your hiring needs and provide the people you need when you need them. Therefore, it is necessary for each party to understand the other organization’s needs and capabilities before signing the agreement. Not all vendors are local, so consider currency differences or language barriers that might exist with global vendors before proceeding. Risks should be evaluated and taken into consideration when contracts are drafted. Finally, to avoid misunderstandings, services or materials should not be provided before the contracts are signed.
After the contracts have been finalized, frequent communications will help vendor performance. Adequate lead times will allow vendors to build and maintain a pipeline of candidates ready to join the client organization. Sharing accurate information about job descriptions, rates and assignment duration will also help your suppliers provide the best fits for your jobs. Investing in vendor management systems (such as SAP Fieldglass) will simplify supplier relationship management and ensure billing and invoicing transparency. Furthermore, ensuring billing, invoicing and payments are completed per the time frames listed in the contract will help build trust between companies. Inviting suppliers to company events will give the organizations the opportunity to learn more about each other and discuss how to strengthen their existing partnership.
Only one relationship to manage & access to all vendors and talent within the staffing program; these are just two of the many benefits of partnering with a Managed Service Provider. This strategic approach to hiring talent helps with cost control, faster fill rates, diversity and efficiency.