Best practices: Consolidating the talent supply chain

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Posted by Joel Capperella

August 19, 2010

One thing I have learned throughout my career is that execution is perhaps the most difficult everyday task. I am not of the belief that great ideas are a dime-a-dozen. In fact, it is my position that truly great and game-changing ideas are rare.

Good ideas, however, seem to occur most moments of most days. Unfortunately, a large majority of the good ideas wither on the vine of misplaced action, fragmented action, or no action at all. In fact, the graveyard of failed business objectives is littered with half-hearted execution plans that were intended to propel the objective to completion, but instead became its silent killer.

I see this time and again among workforce management efforts aimed at improving the cost infrastructure of the talent supply chain. As one who makes his living with one of these suppliers, it is an effort that can at times make me cringe.

It's not because we are fearful of losing business, but because that effort almost always boils down to a poorly executed exercise of eliminating suppliers from the network without properly considering the impact on the hiring managers who are desperately dependent on the network. It becomes a numbers game where recommendations are backed up by slick spreadsheets and pretty graphics illustrating the nirvana of a cost-justified talent supply chain.

However, in reality, the numbers rarely tell the entire story. Volume is a good place to begin and justifies cursory short listings. But it does not provide an examination of the talent that is accessed from the provider, the hiring managers who have developed the supplier relationship, or the process that does or does not enable intelligent utilization of existing suppliers. This is where a good idea -- improved cost infrastructure of the talent supply chain -- begins to fall into the no man's land of poor execution.

To properly evaluate all the elements of the supply chain, a broader discussion involving more people must take place. The participants have to actually care about the topic at hand and not be afraid to own their group's interests in a priority position. In other words, the dreaded cross-functional team must be created and collaborate to execute.

Ultimately, the composition of the team itself is what makes or breaks success, behind only executive sponsorship. The members of sponsorship or of the team have to genuinely care about the objective. And not in a parochial way, but in a way that can visualize how the proposed idea will become a reality and the day-to-day operational activity it will entail.

Team members almost always have to fall into one of two categories: Clear cut "A" players or aspiring "A" players seeking to illustrate the value they bring as part of their contribution. Accountability must trump authority, and enabling reporting must overpower mindless status submittal. If this sort of team composition cannot be achieved, the goal itself ought to be evaluated.

More specifically, here are some areas that can help the consolidation of the supply chain be executed successfully.

Representation. The parties that will be impacted by the consolidation must have representatives on the team established to execute the objective. It must be clear that their participation on the team is not to defend their turn or the current way of doing business, but to adopt the objective and work to ensure that the group being represented will benefit from decisions made. This frequently includes working hard to help constituents see the opportunity of proposed changes, and creating demonstrable insight into how the manifestation of the change will deliver that opportunity.

In the context of supplier consolidation, it is critical to include hiring managers from major and minor talent purchasing centers. If there is a single manager frequently using a niche vendor, it is negligent to eliminate this supplier without uncovering the reason it is in the mix. Find out if the supplier is being used simply because it is the hiring manager's brother-in-law, or if there is particular expertise that explains the relationship.

Process. Proper representation begets process analysis. The acquisition process of temporary talent is fairly ubiquitous, even if the suppliers themselves are not. Initial evaluation should begin to immediately identify process issues that contribute to the current cost infrastructure and highlight areas of improvement.

For instance, isolation among hiring managers that leverage similar talent frequently leads to one of the two (or both) paying rates that are not very competitive. Simply improving the visibility between the two -- sharing talent demands, performance expectations of suppliers, and opportunities for sharing resources -- will result in improved cost position for both hiring managers.

Sacrificing preference. In instances of preferred usage, occurring when one particular group has the suppliers they believe are unique enough to their needs to justify the current cost structure, it is essential to uncover in detail exactly what leads to such perspective. Invariably, there is not much fat to back up the belief that the provider is so exceptionally unique that the rate structure should be blindly accepted. It is, however, a difficult situation to overcome, because if such perception exists, it is likely to be accompanied by strong supplier relationships.

Ultimately, a decision must be made to determine the fiscal value of those relationships. In other words, if a change is forced upon this group, will it have such a detrimental effect that minor cost savings are not justified?

A difficult question to answer the situation underscores the necessity of solid execution. To address this challenge, the group in question must be afforded the opportunity to test alternatives while agreeing to do so as objectively as possible. It is likely that the result will show an 80/20 result -- meaning that 80 percent of the time a consolidated supplier would satisfy the needs of the demanding group in question.

Documentation and communication. This is probably the most difficult task in the entire effort. Policy and process has to be documented and communicated. The written word is obviously a necessity, but more importantly, personal and frequent enabling communication has to be leveraged. Having the representatives of the interested groups deliver the communication improves adoption.

This, of course, is not an exhaustive list, but hopefully it will provide some inspiration to attack supplier consolidation with confidence. And more importantly, to execute the effort to ensure maximization of value. The results are not only fiscally rewarding, but in my experience, they typically result in a stronger supply chain and deeper supplier relationships, not to mention a more collaborative management team where workforce issues are concerned.

This is just one perspective, however. What tips do you have to offer your peers on the execution of supply chain consolidation?

Topics: Staff Management, HR Strategies

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