In our R.E.S.C.U.E series “E” is for Expertise.

Purchasing any product or service requires a certain level of expertise.

There will be some aspect of the commodity that is critically important and missing or not fully understanding this can result in the business not obtaining value for money and incurring unnecessary costs.

The Problem

Here is an outline of an example on when a certain level of commodity expertise is required.

• An organisation in Financial Services had a requirement for temporary personnel
• There were also additional requirements for permanent recruitment
• There were no dedicated purchasing personnel
• Each department had to manage their own requirement
• There was little to no co-ordination between departments
• None of the departments had any clear understanding of terms and conditions and the impact they can have
• Multiple suppliers being used on ad-hoc basis across the business
• There was no cost transparency and no understanding of the charges being incurred

There were a number of dangers that the organisation were faced with.

First, not managing terms and conditions can result in agency costs for permanent placements being incurred twice when a new placement fails.

The business is unable to accurately budget on future requirements, as the costs are not fully understood

Using multiple suppliers on an ad-hoc basis will result in higher costs being incurred

The Solution

The initial stage was to build a profile or baseline of the current cost structure.

All eight (8) current suppliers, which is far too many were contacted, and the required data obtained.

Covering both permanent and temporary placements the itemised data included general information such as the position or role but more importantly a break down of the costs to clearly show all the constituent elements, including the agency margin or fee.

Discussions were then held with all relevant departments to first, determine the range of personnel the required and confirm the required specifications for each role or position.

We then looked to obtain feedback on both the capability and passed performance of each of the current suppliers.

As a result of these discussions a number of the current suppliers were excluded from taking part in the review and forthcoming tender.

In addition to the remaining current suppliers, further research was undertaken, and a number of potential new suppliers were added to list. This resulted in a total of 6 suppliers being invited to tender for the business.

Once all the suppliers had submitted their initial proposals the following points summarise the process that followed together with the final outcome.

• Reviewed proposals, analysed data, provided feedback & held further discussions resulting in 2 being shortlisted
• Arranged presentation meetings to the client
• References were obtained and financial due diligence carried out.
• One supplier selected
• New procedure & KPI’s introduced
• Clear T&C’s agreed.
• All departments using the same supplier
• Agency fees reduced by 48%
• Annual costs were reduced by approximately £30,000

Final Thoughts

Sole sourcing is not always the answer. That has to be decided on a case by case basis, as everyone’s requirements are different.

It is critical that you are aware of & fully understand the terms and conditions of any purchase, not just recruitment

Know what you pay for a service. It is your money after all

If in doubt seek advice when purchasing a requirement. Speak to friends, business contacts and use resources like LinkedIn