Inside an unprecedented MSP for complex contingent workforce management.
Interview with Doug Cutrell, director of professional services, and Mary Hassler, program manager for professional services, at Siemens
Siemens AG (NYSE: SI) is a global powerhouse in electronics and electrical engineering, and operates in the industry, energy, and healthcare sectors. For more than 160 years, Siemens has built a reputation for leading-edge innovation and the quality of its products, services, and solutions. With 405,000 employees in 190 countries, Siemens reported worldwide sales of $102.9 billion in fiscal 2010.
Siemens’ United States headquarters is in Washington, D.C., and reported sales of $19.9 billion—employing more than 60,000 people throughout all 50 states and Puerto Rico.
IN PURSUIT OF STREAMLINING
As a global giant, Siemens’ contingent workforce was large and growing, and the procurement process was complex. The goal was to have a single point of contact, a single platform, and a single supplier. Siemens wanted to streamline the contingent workforce program and make it more efficient, cost-effective, and transparent. There wasn’t a central IT system, nor was there an easy way to compare costs and supplier quality. A strong and consistent compliance program was another key goal.
SourceRight Solutions, which had been working with Siemens Healthcare since 2006, was awarded a multiyear contract renewal and a significant expansion of its service footprint to additional business units in a competitive selection process. SourceRight’s resources, knowledge, and technical expertise to run a highly complex MSP were contributing factors to the win.
With a demonstrated ability to run complex managed services programs (MSPs) for companies worldwide, SourceRight took an innovative approach, with an inclusive supplier program, cost transparency, and significant cost savings.
The solution is designed to enhance compliance, increase efficiencies, improve cost-effectiveness, and centralize management and operations for the procurement of more than 5,000 contingent labor positions. The SourceRight program encompasses Siemens operations in nearly all 50 states, as well as Canada and Puerto Rico. SourceRight manages supply chain strategies across all Siemens job families, including IT, engineering, professional, technical, administrative, light and heavy industrial.
To overcome one of the major hurdles Siemens faced—an inability to evaluate its contingent labor programs—SourceRight’s centralized MSP not only drives measurable advantages in terms of cost, quality of hires, and efficiency, but also establishes meaningful metrics.
In the U.S., the Siemens/SourceRight solution is the first MSP designed in this unique commercial configuration on the Fieldglass technology platform, which is aimed at neutralizing the economic strains that both staffing suppliers and large employers are facing. SourceRight’s optimized services approach enables all parties, including suppliers, Siemens, and SourceRight, to have a clear view of the program’s financial structure, achieve cost advantages, and increase efficiencies, while delivering high-quality talent. Specific benefits of the delivery structure include:
• A break-out of statutory costs, such
as state, unemployment, social security, and workers’ compensation to provide maximum cost transparency and minimize risk exposure;
• Graduated supplier gross markups
based on sourcing demands and difficulty levels by job family;
• Realization of cost savings
through tenure discounts and volume incentives;
• Distribution of volume incentives
based on market share to ensure equity across suppliers; and
• Process optimization leveraging
Fieldglass, a leading vendor management technology system for contingent labor procurement.
SourceRight delivered a scalable outsourcing model that includes flexible configuration options, global program management oversight, optimized supplier management, and decision support analytics. Siemens will also benefit from SupplierEdge, which streamlines order processing and supplier management to ensure a measurable ROI, access to high-performing preferred suppliers, performance quality, and compliance with supplier diversity programs.
With one comprehensive technology platform, compared to seven or eight previously, efficiency and ease of use have skyrocketed. SourceRight also provides data and trend analysis to help Siemens develop better-informed strategies. Another success is SourceRight’s ability to provide proven, high-performing staffing suppliers, even in remote locations.
A Q&A WITH SIEMENS:
Doug Cutrell and Mary Hassler of Siemens discuss the implementation of the first-of-its-kind managed service program (MSP) to meet the needs of a growing and complex contingent workforce.
WHAT WERE YOUR MAJOR CONTINGENT LABOR CHALLENGES AND WHAT WERE YOU HOPING TO ACHIEVE?
Cutrell: Our contingent workforce is large and growing, and the procurement process is complex. Our goal was to have a single point of contact, a single platform, and a single supplier. We wanted to streamline the process and make it more efficient, cost-effective,and transparent. We also wanted to have a strong and consistent compliance program.
WHAT ARE THE PARAMETERS OF THE SIEMENS-SOURCERIGHT MSP PROGRAM?
Cutrell: The program encompasses Siemens Healthcare and Siemens Industry and includes all of the Siemens job families, including IT, engineering, professional, technical, administrative, and light and heavy industrial. We are implementing the program in nearly all of the 50 states, Canada and Puerto Rico.
HOW IS THE PARTNERSHIP WITH SOURCERIGHT STRUCTURED?
Hassler: The scope of the program is very broad so we have a central management team, as well as onsite teams in all of our major locations. The program touches multiple departments at Siemens, including HR, IT, and procurement, and we have collaborative teams working in all of those areas. We collaborate closely on every aspect of the MSP program.
CAN YOU PROVIDE AN EXAMPLE OF HOW THE PROGRAM WAS IMPLEMENTED?
Hassler: We chose a software platform, Fieldglass, to help centralize and automate all the processes. The SourceRightSM team worked closely with Siemens’ IT departments to aggregate the data and integrate the new system with the existing systems. SourceRight also provided IT training and support to Siemens’ employees.We now have just one technology platform, compared to seven or eight previously. The efficiency and ease of use have skyrocketed.
WHAT ARE SOME OF THE MAJOR ADVANTAGES OF AN MSP PROGRAM?
Cutrell: One of the major hurdles we faced was evaluating our contingent labor programs. There wasn’t a central IT system or process and there was no easy way to compare costs and supplier quality. A centralized MSP program not only drives measurable advantages in terms of cost, quality of hires, and efficiency, but also enables us to establish meaningful metrics.
WHAT ARE SOME OF THE BIGGEST ACHIEVEMENTS TO DATE?
Hassler: The MSP program brings transparency to every aspect of the contingent workforce process, from time-to-fill, to cost-per-hire, to compliance issues. The metrics vary but we have seen measurable improvements in key areas. For HR, it is faster time to fill and higher candidate quality. For procurement, the key metric is lower costs.
Another big achievement has been SourceRight’s ability to provide proven, high-performing staffing suppliers, even in remote locations. Since the scope of the program is so broad, both geographically and in terms of job families, this “layering”
of suppliers has been critical to the program’s success.
YOU MENTIONED TRANSPARENCY. WHAT ARE YOU REFERRING TO EXACTLY AND WHY IS IT SO IMPORTANT?
Cutrell: The MSP program offers a clear view into its financial and delivery structures. For example, there is a break-out of statutory costs, such as state, unemployment, social security and workers’ compensation expenses. Other benefits include graduated supplier gross markups based on sourcing demands and difficulty levels by job family, and cost savings through tenure discounts and volume incentives. This way, we can truly see how our money is being spent and identify areas for further savings.
WHAT ADVICE DO YOU HAVE FOR OTHER COMPANIES CONSIDERING SUCH A LARGE-SCALE PROGRAM?
Hassler: The most important thing is to make sure your MSP partner has the strategic capabilities, technology expertise, and the ability to place the right people on the ground, when and where they’re needed. The MSP provider should have a demonstrated ability to run multifaceted, demanding MSPs. For example, SourceRight successfully trained 1,400 managers in just six months. Not all companies have that capability. Be sure, also, that the provider’s commercial model invokes true transparency, providing an open-book relationship for the supplier and the customer.
HOW DID YOU CHOOSE SOURCERIGHT?
Cutrell: We began working with SourceRight in 2006, and as our needs grew, we went through a competitive selection process for the expanded business. Over the past four years, we had been impressed by SourceRight’s ability to understand our complex business and anticipate and meet our needs. All of those things made the choice simple. SourceRight is an integral partner in the contigent worker program at Siemens, and everyone works well together as a single team.
Doug Cutrell is Siemens’ director, professional services, and Mary Hassler is program manager, professional services.