What are supplier consolidation services in the staffing industry?
28 October 2022

What are Supplier Consolidation Services in the Staffing Industry?

3 min read

When it comes to implementing a successful contingent workforce management program, one of the biggest challenges facing businesses is the ability to successfully manage multiple staffing agencies at once.

In fact, staffing agency management is often a huge burden on internal teams. Managing the processes associated with cost management, compliance, onboarding, contracts and invoicing is time consuming and complex. 

The vast majority of organizations neither have the resources or know-how to implement highly-strategic processes that make managing staffing agencies a fast, cost-effective and efficient process. 

This puts unnecessary burden on internal teams, taking their focus away from their core competencies and revenue-driving tasks that truly help to drive profits and grow their organization. 

So, what can businesses do to better manage their staffing agencies, and, as a result, improve the ROI they realize from their contingent workforce program? Supplier consolidation services can help. 

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What is supplier consolidation? 

Supplier consolidation in the staffing industry streamlines the staffing agency management and control process by allowing a third-party organization to manage all staffing agency relationships within a single consolidation point 

In a Supplier consolidation agreement, a business  works with one vendor who manages the tactical aspects of engaging with a  staffing agency (the subvendors) This is also often known as vendor consolidation, while still allowing business to engage directly with agencies to fill their roles. 

Typical services performed by a subvendor include:

  • Onboarding new staffing agencies
  • Negotiating and agreeing contract with staffing agencies
  • Ensuring staffing agencies comply with their contracts and compliance requirements
  • Contingent worker onboarding
  • Time entry and approval
  • Consolidating approved time into one invoice
  • Invoicing clients
  • Receiving funds and distributing to staffing agencies
  • Providing reporting and analytics that give insights into staffing agency workforce

This alleviates internal teams from the complex and time-consuming paperwork and processes involved in engaging staffing agencies. Instead, the business has just one point of contact, better visibility, improved compliance and one invoice, instead of many.

The famous procurement metrics is that 80 percent of your spend comes from 20 percent of your vendors. But when you flip that, it means that 20 percent of the spend comes from 80 percent of vendors, which means your company has heavy processes and a huge workload for a vast number of vendors that are neither key nor strategic. 

The benefits of subvendor services

By consolidating your vendors into one point of contact and one invoice, the use of supplier consolidation services can help your business realize a range of benefits. Some of the key benefits include:

1 - Alleviate your team from the burden of process control

Supplier consolidation eliminates the headache of paperwork and processes associated with on-boarding, off-boarding and engaging with multiple staffing agencies. They provide consolidation of those vendors under one provider and one agreement to help streamline burdensome processes. By outsourcing that work effort to an organization that has efficient, repeatable processes will free up your internal team to focus on higher value tasks that drive company growth. 

2 - Improve your overall contingent workforce program

Supplier consolidation services typically come with reporting and analytics that give you the visibility you need to evaluate how your staffing agencies are performing. This data gives you the insights you need to make continual contingent workforce program improvements, that reduce your overall costs, improve the quality of your workforce and result in a better ROI.

3 - Improve your vendor rate control

To maximize profitability, it’s crucial that your business has robust rate control processes in place that don’t compromise the quality of your workforce. Supplier consolidation service providers can help standardize your rates, ensuring vendors are compliant with company policies one pricing. That will ensure the rates you are paying your staffing agencies are in line with industry norms and current demand.

4 - Access to a broader range of vendors

Some vendors specialize in very niche areas of the job market, or have a track record in delivering workers for specific departments or geographies, yet they don't have the breadth to be considered a larger, more strategic vendor that can service the broader requirements of an organization. 

In many cases, traditional MSP programs can ignore these vendors as it's a large burden to onboard and offboard vendors that don’t fulfill a large number of jobs. Engaging a subvendor service provider allows your business to access these vendors without the workload of onboarding them directly. The result? Your business can remain agile, with way less vendors to manage.

Are you interested in learning more about how subvendor services can significantly improve how your organization manages staffing agencies? Get in touch with Contrax today. Our team of contingent workforce management specialists would be pleased to answer your questions.

Ready to learn more? Contact us today!

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