From a pure procurement perspective, it’s truly exciting when another corporate function or a very complex series of processes leans heavily on the foundation set by the procurement team. In looking at the core categories in the complex spend world (contingent labor, business travel, meetings/events, etc.), it is clear that procurement’s vast influence plays a major role in how the contemporary enterprise effectively manages these areas from a multi-tiered perspective.
Supplier management typically follows several key sub-areas that form this critical aspect of any purchasing division: supplier risk management, supplier performance management, supplier relationship management, and supplier information management. Colloquially, these processes are sometimes known as “supplier lifecycle management.” (In fact, click here and here for refreshers on how Best-in-Class organizations take on supplier management.)
It’s been previously discussed here at CPO Rising that the contingent workforce management space is evolving at a rapid pace, with the modern “contingent workforce umbrella” causing organizations to reevaluate existing strategies, solutions, and, most importantly, their programs. The current industry perception of contingent labor dictates that SOW-based projects and services (and any associated contractors or consultants) remain a primary focus for any function looking to improve contingent workforce management, whether it be procurement, finance or HR.
It is at this spot that CWM and supplier lifecycle management converges in an effective manner, helping to leverage the high-octane processes of SLM to manage the more nuanced aspects of the contingent workforce umbrella. Today, on CPO Rising, we look at the core components of supplier management and apply them to the more complex aspects of contingent workforce management.
- Supplier relationship management (SRM). At the very core of any supplier management initiative lays its relationships with key suppliers; SRM plays a vital role in supplier lifecycle management due its propensity to effectively handle all relationship aspects with suppliers (negotiations, long-term effects of the buyer-seller deal, etc.). In the CWM world, SRM helps program executives manage the complex suppliers of talent and services that comprise many internal projects, as well as helping understand how these suppliers effect the long-term viability of core suppliers.
- Supplier performance management (SPM). Remember when we spoke of the importance of measuring CWM quality and effectiveness? The “complex contingent labor” component of the contingent workforce umbrella heavily relies on providers of both professional and non-professional services, including consultancies, financial services, etc. It is crucial for those tasked with managing the CWM program to understand how these suppliers are performing, and, since the vast majority of these services are utilized to fulfill project-based needs, have the ability to measure their performance against pre-communicated (and well-defined) project goals, milestones and delivery dates.
- Supplier risk management. The same rules for non-complex supplier management apply here; it is extremely critical to monitor current and future suppliers for any signs of financial stress, and also be prepared in the event of a supply chain disruption. Applying this line of thinking to the CWM world, program managers must ensure that they have a “Plan B” in the event a complex service or contractor is unable to fulfill its duties. With so many projects that utilize contingent labor tied to the overall goals of the greater enterprise, supplier risk management is an effective strategy.
- Supplier information management (SIM). This item is perhaps the most significant of all the supplier lifecycle management attributes, mainly due to the fact that it pertains to a common keyword around these parts: intelligence. Most types of enterprise intelligence are useful for multiple purposes, including spend or financial intelligence. Pure supplier intelligence, particularly in the CWM world, can help shed further light on SPM aspects and help those running contingent workforce programs gauge the true connection between suppliers of complex services and the achievement of project goals, objectives and milestones. This intelligence can be leveraged in long-term CWM planning, especially when selecting ideal suppliers for future projects and initiatives that will utilize contract talent.
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Best-in-Class Supplier Management, Part II
