Are you in procurement, HR, or just the person within your organization who has been tasked with the job of straightening out your staffing agency mess? It’s fair to say, sourcing effective staffing agencies is far from an easy process. In this article, we look at why the tendering process does not work for staffing agencies.
The first thing most procurement professionals will tell you is that you need to do a complete market scan to identify all the potential suppliers, then do a request for information (RFI) to whittle the list down, then a request for proposal (RFP) to choose a list of preferred staffing agencies, and then, finally, negotiate deeply discounted rates with your chosen staffing agencies.
If you are buying pens and paper, then, yes, a formally managed tendering process makes sense.
However, this isn’t going to work for your contingent workforce program. In fact, the human capital element of traditional procurement processes can cause serious damage to your company’s ability to source, retain and manage contingent workers through staffing agencies.
In this article, we look at why this is the case, and what you should be doing instead.
What is the tendering process in procurement?
Tendering is the process in which an organization in need of goods or services invites other parties to submit a proposal or bid to provide these goods or services. This information is formally referred to as a request for tender (RFT).
The RFT typically includes documents outlining the rules of the tender, such as the conditions of the tender, scope, evaluation criteria, and the conditions of the contract. This RFT is sent out to invite suppliers to submit their responses.
The tender is a document that is submitted by the supplier in response to the RFT, which is essentially an offer to supply the goods or services that the buyer is looking to source.
Why the tendering process doesn’t work for staffing agencies
With decades of experience in the contingent workforce world, we've seen first-hand how the traditional procurement tendering process can damage contingent workforce program ROI.
We’ve observed how procurement teams have run a formal sourcing process, manage a detailed RFP, decide on a set up preferred suppliers, and negotiate them hard to drive “cost savings” and yet contingent workforce results get increasingly worse over time.
Fulfillment rates drop, time-to-fill metrics slow down, and hiring managers become enraged as what they had before worked for them. In the end, the same result always happens. Hiring managers go rogue and hire contingent workers on their own terms and at their own rates, and preferred suppliers are left in the dust along with the company’s contingent workforce program.
Improve how you source staffing agencies with a vendor management system
While a full market scan and tender process makes sense in some cases, particularly for organizations that have never done a proper staffing agency review, we generally recommend businesses only use a tendering process as a last resort.
Instead, your business should start by ensuring all of its contingent workforce information is in one place with the use of a vendor management system (VMS). This empowers you to analyze your staffing agency’s performance based on predetermined KPIs, giving you a good handle on how they are performing.
Not sure what a vendor management system is? Read our complete guide to VMS technology.
When you can see all of your staffing agency data in one place and can evaluate how they are performing, you can begin to make smart supplier decisions that improve your contingent workforce ROI. You can start to remove your weaker suppliers, replacing them with staffing agencies that will better help your business to fill weak spots in fulfillment (such as skill type or location).
By taking this approach instead of the traditional lengthy procurement tendering process, your business will significantly improve the ROI of your contingent workforce program and source staffing agencies dramatically faster.
Read More about Managing Staffing Agencies with a VMS:
➡️ How to Manage Staffing Agencies: Your Complete Guide➡️ 5 Reasons to Use Staffing Agencies: & How to Manage Them Effectively with a VMS➡️ VMS: The Simplest Way to Manage Your Staffing Agencies➡️ Managing Staffing Agencies: Your Guide to Performance Management & KPIs➡️ Staffing Agency Bill Rate: What is it?➡️ Best Practices: Managing Staffing Agencies for your Contingent Workforce➡️ Managing Staffing Agencies: What Bells & Whistles do you Really Need?➡️ Using VMS Software to Track Staffing Agency Performance➡️ 5 Dangers of using Manual Spreadsheets to Manage Staffing Vendors➡️ How to Choose a Staffing Agency for You Company's Contingent Workforce Needs➡️ VMS Technology: Why Manual Spreadsheets are Not Effective
Interested in learning more about Vendor Management Solutions?
Whether you are looking for a new VMS Solution, or just getting started, we are here to help. See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights) or Book a Personal Demo Today!
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