In some ways the procurement profession is in a stronger position than ever before. But in others, in the words of great philosopher Bono, we “still haven’t found what we’re looking for” when it comes to the contingent workforce.
Different Categories, Different Organisations, Different Value
Is our role really about cost reduction when it comes down to it? Or are we moving into a brave new world where the small, but perfectly formed, procurement function is focused on extracting innovation and competitive advantage from key supply markets?
Clearly, “value” is a word that has to feature, but saying procurement is about value is a bit of a truism; of course it is! And so is everything else that an organisation does.
This in itself doesn’t help us to progress very far in the debate but one useful thought might be this: Every spend category within our organisation contributes value to the organisation in a different way; and for any given spend category, that value will differ from organisation to organisation too.
The Evolution of Procurement and What it Means for Managing Contingent Labour
In our new paper, The Evolution of Procurement and What it Means for Managing Contingent Labour, written in conjunction with Spend Matters, we look at this issue and also touch on other aspects around where procurement might be heading, including the fashionable idea of “procurement as a service”.
Using contingent labour as an example it is possible to illustrate how procurement has evolved and how a category can create value in various ways.
In some organisations, obtaining the right contingent labour, such as highly skilled technicians, creative folk or IT experts, might be a direct source of innovation and, as such, competitive advantage. In other cases, cost reduction and operational efficiency through a super-slick engagement processes for contingent workers might be the key factor.
The key point, however, is that every procurement professional needs to understand the contribution for their categories in their organisation.
Procurement Must Take A Multi-Pronged Approach To Contingent Labour
Any analysis will immediately confirm that procurement must follow different approaches depending on both the category of spend being addressed, and the nature of the business and the drivers of success.
Are the ingredients for a food product important to its success, or is it enough that they are safe to eat? If we spent more on a better quality purchase, would we sell more or be able to charge a higher price?
Considering services spend categories, how important, for instance, is marketing to the success of the firm? If innovation and new products are key drivers, then supporting that by identifying and working successfully with the very best external marketing services providers will be more important than haggling over their margins.
Contingent labour spend may simply be a case of minimising cost at an acceptable level of risk, or it may be much more strategic, with access to hard-to-find talent, and speed of engagement critical to the business.
That was reflected in our roundtable last year when we heard several excellent examples of how the use of contingent labour was truly linked to organisational strategies. “We are looking at scenario planning and resourcing models to help predict blue collar contingent labour requirements.” And the days of the contingent workforce being purely low-level blue-collar or administrative staff are long gone.
“Some of our contingent workforce are key to how we win business from our own customers; they are a strategically important and also scarce resource”.
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