In every global organization, procurement teams assume a vital role in nurturing growth. Their mandate spans from ensuring supplier effectiveness to compliance. The growing demand for a diverse global supplier base necessitates procurement’s broad knowledge base. Investing time in supplier vetting, internal stakeholder management and handling the nuances of supplier contracts all have a major influence an organization’s success.
Yet, within this pivotal function lies procurement’s most formidable challenge: a lack of cohesion leading to poor supplier management. This issue is particularly pronounced in talent acquisition and the procurement of recruitment agencies. Ineffectively managing agency suppliers can significantly hinder business growth, resulting in poor hiring decisions and delays.
Blame, however, doesn’t rest solely with procurement teams. There are major obstacles diverting their energy from effective supplier management to other essential administrative tasks. To address this problem, procurement must leverage the right tools to make better decisions and shift procurement into business enablers.
Three Key Pitfalls in Supplier Management
When it comes to supplier management within procurement and HR, three distinct challenges often lead to major issues:
Contract complexity. Procurement often finds itself stuck in an endless sea of contracts to negotiate, manage and sign off. This issue is amplified when procurement and talent acquisition have to manage hundreds of staffing agencies due to the diversity of the business needs. This supplier base includes all type agencies, from independents to those serving a particular region or skillset, through to global suppliers and those providing permanent or contract labor.
Shortcuts to efficiency. Due to the excessive time spent on contract negotiations without necessarily knowing whether the supplier can deliver, procurement and HR teams often resort to a checklist approach to try to speed things up, overlooking the suitability of the supplier. Rather than focusing on hiring the best talent in specific regions by having a diverse and agile supplier base, they opt to save time by controlling a smaller pool of suppliers that don’t always provide the access to talent the business needs.
Compliance challenges. When the business does not receive the quality of candidates they require, hiring managers often disregard standard process and engage suppliers directly or try to force procurement and HR to onboard new suppliers quickly. This approach not only creates tension but also results in non-compliance and poor contract negotiation, often leading to the business absorbing higher costs. Also, time dedicated to contracts and onboarding recruitment agencies reduces the focus on the actual hiring process and properly analyzing supplier performance to generate the best results.
Resolving these three challenges would change the role of procurement and HR from processors to growth enablers.
PREMIUM CONTENT: Staffing Trends 2024
Getting to the Root of the Problem
Poor supplier management isn’t a lack of appetite to receive the best talent from agencies; it’s the challenge of knowing who the right agencies are, onboarding them quickly and compliantly and not overpaying on fees. As procurement and HR grapple with onboarding new suppliers, they lack the bandwidth to effectively manage agencies. However, driven by technology there are actionable ways for procurement and HR leaders to regain control, streamline contracts, achieve global visibility and ensure compliance.
Reclaiming Control in Four Steps
Embrace leading-edge technology. The multi-billion-dollar HRTech market is experiencing rapid growth, offering powerful tools to streamline talent acquisition, enhance efficiency, and promote informed decision-making. Employ technology to manage staffing agencies, identify optimal agency performance, and significantly streamline contracts.
Prioritize compliance. Leverage technology and automation to establish a robust compliance framework, routine audits, clear policies, and centralized contract management. Foster a culture of visibility and compliance within procurement and HR teams.
Leverage data-driven insights. Move beyond technology adoption to harness the power of data analytics, providing invaluable insights into supplier performance and hiring trends. Utilize these insights for informed decisions and continuous improvement in supplier relationships and talent acquisition strategies.
Promote collaboration. Procurement and HR must operate in harmony. Fostering collaboration between these departments is paramount to aligning on overarching business objectives.
Incorporating these straightforward steps into their practices enables procurement and HR teams to streamline contracts, enhance talent acquisition strategies and reduce compliance risks. By doing so, they not only overcome the common challenge of poor supplier management but also chart a course towards becoming strategic business enablers in the fiercely competitive landscape of modern talent acquisition.
Don’t let supplier management impede progress; instead, let it propel global businesses toward a brighter future.
