An effective managed service program requires transparency in the
supply chain.
 
By Matt Rivera
 
Typically, in an engagement for a managed service program, the MSP provider oversees the staffing supply chain, which comprises other staffing suppliers that work through the program to fill a customer’s temporary positions. A single staffing company—no matter how large or efficient—usually cannot staff all positions, at all times, in all locations. Therefore, it’s better to leverage various suppliers that are in touch with a specific industry, location, or skill to find the right people for the customer.
 
Today, most supply chains use a mix of suppliers, including large, generalized staffing firms and smaller, more specialized or niche partners. Suppliers are typically categorized by the type of positions they fill (i.e., IT, clerical, light industrial, or professional), the specialized skills they place (software engineers, trainers, legal professionals, etc.), or the geographic regions they cover. Depending on the size of the customer, the MSP can manage anywhere between five and 50 staffing vendors.
 
Ultimately, the goal is to meet the customer’s staffing needs. Though the MSP provider is responsible for the program, the supply chain can make it or break it. For this reason, suppliers and MSPs need to work together.
 
“Communication is the biggest component of the relationship,” says Vincent Rossy, CEO of CorTech. “As long as everyone communicates and works through issues, we will service the customer. As a supply chain partner, our customers are both the MSP and the end-user. We need to service the MSP to service the end-user and see success.”
 
Fran Gatto, president and CEO of ABOUT-Consulting, adds that excellent people and trust are also necessary for a successful relationship between an MSP and its suppliers. “What I value the most out of an MSP relationship is mutual respect. This partnership allows the vendors to be committed to the success of the program, and instills the drive to find and promote the best talent available,” she says.
 
Have Issues?
The most common issue that arises between the MSP and its staffing suppliers is access to and communication with customer managers. In some programs, only the MSP is allowed to interact with managers to take orders or get feedback on candidates. This can be done through a technology interface, such as a VMS (vendor management system), to ensure all communication originates from a single point of contact. In other programs, staffing suppliers might have direct access to managers.
 
Whichever method is used, the communication and access must be controlled and consistent. To prevent managers from being constantly disrupted and ensure that program data is tracked and measured seamlessly, the MSP should utilize technology (the VMS) or establish guidelines for communications, such as copying the MSP on emails and documents. If the MSP is the main communicator, guidelines should state if and when suppliers will be involved in conversations or meetings. If the suppliers can contact managers directly, communications guidelines should define appropriate contact.
 
Issues also might arise if the MSP hoards jobs or only releases certain jobs to suppliers. However, most MSPs have ceased this practice because of its adverse effect on the program’s performance. In addition to damaging the relationship with suppliers, hoarding jobs without the expertise or resources to fill them only hurts the MSP in the end.

This brings up the issue of vendor neutrality. There are two definitions of vendor neutrality: (1) The MSP does not fill any jobs, and all jobs are sent out to suppliers to be fulfilled; or (2) The MSP (or an affiliate of the MSP) can fill jobs, but jobs are distributed simultaneously to all suppliers. In this case, the MSP’s performance is measured alongside other suppliers.
 
Which definition of vendor neutrality is used is up to the customer, but it should be understood and stated up front. Sometimes, it depends on the types of jobs being filled, but more often, it’s a reflection of the customer’s approach to filling jobs.
 
There isn’t a definitive argument either way as to which is better. However, since the MSP’s goal is to effectively and efficiently fill customer jobs, having the best suppliers in play—even if that includes the MSP—is probably best for the customer.
 
Lastly, another issue that might impact the supply chain relationship is the perception of the MSP as a “black hole.” In this case, the MSP doesn’t give suppliers feedback on the candidates presented. Suppliers submit resumes in response to jobs from the MSP, but they aren’t updated on the appropriateness of these candidates or on the status of the job openings. There’s nothing worse for a supplier than to submit candidates for a position that is already closed, or for them to lose a candidate for other positions because the MSP has not provided timely feedback on a particular position.
 
Supplier Engagement: Best Practices
The strongest MSP programs involve all suppliers working harmoniously together to meet the needs of the customer.
 
In fact, the best programs begin relationship building before the formal working arrangement even begins. Craig Kasper, executive vice president for Professional Staffing at Huntsville Executive Search, believes that suppliers should evaluate the MSP before working with them.
 
“Do your homework,” Kasper cautions. “Are they [the MSP] a cultural fit with your mission, vision, and values? Validate their reputation. Do they line up with your industries, services, and core specialties? Consider the structure of the supply chain. Does it add up to a potentially strong business fit?”
 
As an MSP, consider these best practices for engaging suppliers:

• Encourage open communication. This can come in the form of vendor forums and other regular interactions. Suppliers should be trained and receive regular communications on the policies and procedures, both for their interactions within the MSP program, and for their workers while on assignment. In addition, host annual or biannual vendor meetings to discuss high-level changes to the program. Schedule more regular meetings to discuss ongoing changes and performance issues quarterly, if not more frequently. Treat your vendors as partners, and maintain clear points of contact and good customer service with them. Make sure they know who to call and respond to their inquiries quickly.
• Set clear expectations at the beginning of the engagement and require adherence to policies and procedures. Identify contractual requirements and how they should be audited, including what insurance is required. This protects both the MSP and the customer. Reevaluate these expectations throughout the engagement and again at its conclusion. Implement screening processes, proper documentation, fair bill rates, strategies for contact with customer managers, paperwork guidelines, or other deadlines. Monitor and audit vendors for compliance.
• Implement efficient invoicing and payment to suppliers. Establish a clear process to ensure that invoicing is timely. Typically, the MSP is paid by the customer, and the MSP pays the suppliers. In some cases, the MSP does not pay the suppliers until it is paid by the customer. Delays or inaccuracies invoicing the customer can delay payment to suppliers, and nothing de-motivates a supplier like not getting paid. There should also be checks to make sure suppliers are paying their contractors regularly. While it is the supplier’s responsibility to pay their employees, the MSP should investigate any complaints from workers.
• Monitor performance regularly. This is most important in a vendor-neutral environment. Suppliers should understand how they compare to other vendors, where they stand with the MSP, and what metrics they are required to achieve. Performance tracking should be consistent for all vendors; any exceptions should be clearly noted in advance.
• Be transparent; competition can be a great motivator. Include both qualitative and quantitative metrics such as response time with qualified candidates, fill rate, interview ratio, candidates completing an assignment, and adherence to policies and procedures.
• Manage volume and level of support realistically. A vendor who gets five open jobs a year isn’t going to be as motivated as one who gets five a week. Look for ways to increase the volume to suppliers and decrease the overall number of suppliers in the supply chain. Though working through an MSP is not ideal, a supplier who sees good volume and jobs within their sweet spot, at reasonable rates, will respond and succeed. Then, so too will the MSP and the customer.
• Leverage suppliers’ knowledge. Tap them for insights into supply and demand, bill rates, and other industry-specific information. An effective supplier can also advise the MSP on the availability of skills or volatility of the skills market.
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The staffing supply chain has the potential to make or break your customer’s business and your reputation as an MSP. Implementing best practices to build and maintain a solid relationship throughout the staffing supply chain ensures the success of everyone involved.
 
Matt Rivera is director, customer solutions for Yoh. For more information, visit http://blog.yoh.com or www.yoh.com.