UNLOCKING THE VALUE OF THE TOP SUPPLIERS THE POWER OF OPTIMIZING YOUR TALENT SUPPLY CHAIN TOM TISDALE
TABLE OF CONTENTS 3 Introduction 4 Analytics considers the continuous flow of talent through a business 5 Insights delivered through the talent supply chain analytics portal 6 Supplier rationalization and optimization the why 7 Using Pareto Analysis the how 8 Client s supplier scorecard summary actionable insights 9 Comparing suppliers by KPI interrelationships the action plan 11 Supplier scorecard across programs 12 Conclusion 2
Few companies can succeed without having the right people in the right place at the right time. The use of contingent labor is expected to continue to grow as organizations look to capitalize on the use of all talent types to increase their competitive position within the market. In a recent survey from Harvard Business Review Analytic Services, it was found that some 70 percent of respondents agree that using external workers allows their organization to meet market demands and maintain efficiency that would otherwise be difficult. And more than half see the value of the external workforce increasing in the next several years. The good news is that we are immersed in an era of big data. Organizations have access to more information about their external workers and talent suppliers. Through more in-depth analysis of this information, organizations can develop actionable insights, while aligning only the topperforming suppliers against their organizational need. However, many companies develop these insights within a narrow band. They use analytical tools to examine inward-facing factors looking at metrics, such as how quickly they can fill roles or at simple bill rates or mark-ups, independently. Leading companies are instead tapping into higher-value analytics activities that evaluate the composition of their supply chain and ultimately ensuring that they have the most competitive suppliers for their industry. 69 % say using external workers allows our organization to meet market demands and maintain efficiency that otherwise would be difficult. 66 % say using external workers is beneficial to our organization and the external workers. 53 % say using external workers allows us to bring in expertise that our full-time staff lacks. Source: Holistic Talent Supply Chain Management, a Harvard Business Review Analytic Services Report 3
ANALYTICS CONSIDERS THE CONTINUOUS FLOW OF TALENT THROUGH A BUSINESS When focused on optimizing the supply chain for contingent labor, an organization should look outside its own doors and rigorously evaluate its activities across the entire talent supply chain and against global best practices. Today, successful companies are realizing that effective planning involves making the most out of big data which previously seemed unworkable and making decisions based on that. Big data, along with the latest data analysis techniques, is key to gaining new insights. Widening the lens to focus on the whys and the hows, along with performance metrics and benchmarking of talent suppliers, is pertinent to establishing sought-after predictive insights and, ultimately, the most effective supply chain. The KellyOCG approach to analytics enables a smarter, more data-driven methodology to create and manage your talent supply chain, and delivers actionable insights to improve talent management practices. Successful companies are realizing that effective planning involves making the most out of big data. 4
INSIGHTS DELIVERED THROUGH THE TALENT SUPPLY CHAIN ANALYTICS PORTAL There is a distinct difference between the reports provided by a managed service provider (MSP) through a vendor management system (VMS), and the reports provided through the talent supply chain analytics portal. Within a VMS, you have defined views with a focus on spend visibility, as well as the who, what, where, and when. Typically, MSP-driven reports are aggregated by segment (i.e., business unit or manager) and focus on a single key performance indicator (KPI). Essentially, you are viewing the outcome of Who spent what where? KellyOCG does not limit its focus to the who, what, where, and when. Instead, the emphasis is placed on how and why. The starting point is a premise rather than a predetermined view. Data is used whether statistical, visual, predictive, or benchmarking to understand and analyze any interrelationships. Validation is first. Then the hypotheses are tested. KellyOCG looks for insights to drive optimization on behalf of our clients. VMS/MSP reporting helps you achieve efficiency: that you re doing things right. Talent supply chain analytics ensures effectiveness: that you are doing the right things. As your program model matures and process improvement continues, these analytics will validate and assist in determining the next steps of program evolution. Talent Supply Chain analytics ensures effectiveness: that you are doing the right thing. 5
SUPPLIER RATIONALIZATION AND OPTIMIZATION THE WHY KellyOCG has a refined and proven process to ensure that its recommendations encompass all available areas of evaluation to make the best optimization decisions. First, an evaluation of how much of an organization s spend is attributed to the top suppliers is performed. The next step is to then look at the supply chain to establish how well they are performing based on established KPIs, with a focus on efficiency and effectiveness. To assess whether their performance is consistent across multiple programs, and to see if any anomalies must be considered, a comparison in how they have delivered for multiple organizations must be performed. Collectively, this comprehensive view will drive recommendations for supplier optimization, which traditionally drives 5% - 10% in measurable cost savings. Savings are more considerable and the need greater as services procurement and statement of work spend are managed within the program. This comprehensive view will drive recommendations for supplier optimization. FIGURE 1 6
USING PARETO ANALYSIS THE HOW The objective is to understand how to design the supply chain, and to rationalize and optimize the suppliers within the program. To start, a common statistical and procurement technique, the Pareto Analysis, is used. In this case, the Pareto Analysis focuses on understanding who the top suppliers in the supply chain are, enabling the understanding of their impact (i.e., the percentage of spend or headcount they contribute). The process begins by visualizing, confirming, and validating the current state. Next, the suppliers that may be rationalized are selected for further evaluation. For clarity, the following provides an illustrative client example. In the figure below, it is shown that 50% of the spend within this client s program equates to 17 suppliers. (Note that the orange bars indicate diversity suppliers.) When looking at the number of suppliers making up 80% of the spend, it is 136 suppliers. This means the additional 30% of spend (between 50% - 80%) is made up by 119 more suppliers a substantial tail to begin to optimize. Through previous client engagements, it was also found that cycle time was reduced by rationalizing the tail. FIGURE 2 7
CLIENT S SUPPLIER SCORECARD SUMMARY ACTIONABLE INSIGHTS It is now apparent that, within this example, a large number of suppliers are contributing only small amounts of the total spend creating a tail which is the focus on optimization. To begin the process of optimizing the talent supply chain, supplier scorecards must be evaluated. The interest is not just in a score (i.e., which supplier hired the most). What needs to be understood are the impacts and subsequent insights for the suppliers across many KPIs, subsequently benchmarking the suppliers to see how they compare to one another. For suppliers within managed programs, the following KPIs are critically important: Response rate Shortlist rate Interview rate Hires (hit rates) False starts Compliance to rate card Contractor evaluation scores Assignment completions (measures quality) Each KPI has an assigned goal. For instance, suppliers should respond to an accepted order 60% of the time. A score is also provided: points correlating to that goal. In the scenario illustrated below, you see that the shortlist KPI and the hires KPI, equally scored at 20 points, are the most important KPIs. Applying this methodology, the optimal suppliers will be illustrated. It showcases where they are performing and not performing, furthering the progress along the talent supply chain optimization journey. Additionally, suppliers are benchmarked against each other and ranked by KPI or the composite score. FIGURE 3 8
COMPARING SUPPLIERS BY KPI INTERRELATIONSHIPS THE ACTION PLAN It is now understood how each supplier scores against a KPI, and the suppliers can be sorted and ranked based upon individual KPIs or the total composite score. So: If someone responds all the time, does that make them a great supplier? Or are they spamming us with resumes, making us inefficient? The true answer in supplier optimization is in the interrelationships between KPIs. KellyOCG goes beyond summary scoring and reporting by using a proven analytical approach. The figure below compares selected scatter metrics hit rate and response rate for an organization. That is: Are our suppliers making hires and responding to us? Or: Is a supplier who responds all the time just sending in sub-optimal candidates and making for busy work without return? The goal is to identify the supplier generating work within the program, but providing minimal or low-quality candidates. Suppliers that treat the program as a low priority and are who not responding will also become apparent. This talent supply chain analytics visualization is a true indication of the supplier partnerships. FIGURE 4 9
COMPARING SUPPLIERS BY KPI INTERRELATIONSHIPS THE ACTION PLAN Figure 4 illustrates that suppliers average a 14% hire rate (above the target of 10%) and a 41% response rate (below the target of 60%). The under-performing suppliers are also shown here, in the lower left quadrant. With the size of the scattered circles indicating the number of orders, it is evident that there are several non-responsive suppliers who are receiving orders but not making hires. Likewise, many suppliers are responding but are not filling orders, resulting in a waste of resources. This talent supply chain analytics visualization is a true indication of the supplier partnerships, in this case, that should likely be optimized. Some effective suppliers are illustrated in the bottom-right corner of the graph. They are highly responsive and dedicated, but not making the median amount of hires. Why? Are they getting the right jobs in the right location? Are they responding too late? These suppliers can be selected for a more in-depth look to understand if they are hard workers that need better alignment, or if they are simply keeping generating work within the program but are incapable of providing necessary results. On the other hand, the suppliers in the top-right quadrant express real dedication with abovethe-line response rates and hires. These are the tier one suppliers. At this point, a filter by labor type and location will enable the evaluation of understanding how best to design the supply chain around these best performers. 10
SUPPLIER SCORECARD ACROSS PROGRAMS After looking at the suppliers within the program and truly identifying the poor performers that are driving up program costs, before making any decisions, they should be benchmarked in comparison to the overall supplier ecosystem outside of the program. Is that poorperforming supplier in your program truly a bad supplier? Alternatively: Could it be an intrinsic program issue? Before action is taken with the supplier, it is important to review their performance in other programs and perform a cross-program comparison. Might their local branch be experiencing uncommon recruiter turnover? After all, the average tenure of a staffing company recruiter is six months. Or: Is there a new recruiter who has not been properly trained on your VMS? The KellyOCG talent supply chain analytics portal is a valuable tool that allows for the analysis and benchmarking of a program s supply base to a much broader supplier ecosystem. FIGURE 5 11
CONCLUSION Immediate action drives results! When you are evaluating the tough questions about your talent supply chain, KellyOCG can help answer them. Today, high-performing organizations have access to more data than ever before. As a strategic partner, KellyOCG s role is to ensure you examine all available data in every conceivable light, ultimately tapping into global best practices through in-depth analyses that were not readily available before. It s not just about filling positions. This fact-based approach takes your big data and benchmarks it against other high performers in your industry, relentlessly scrutinizing the raw statistics in every way possible to yield measurable results. Through answering the whys and the hows, KellyOCG s talent supply chain analytics results in actionable insights, enabling you to make the big decisions in optimizing your talent supply chain. KellyOCG consults with organizations, both with internally and externally managed programs, in defining best-practice supplier analysis and optimization strategies. Scorecarding tailored to each business, as well as analytics portals used to continually measure performance and savings, is also a strategic focus. 12
ABOUT THE AUTHOR TOM TISDALE is Vice President, Talent Supply Chain Analytics, KellyOCG Centers of Excellence. In this role, Tom leads a team in analyzing and aggregating internal and external data to assist clients in managing their talent supply chain. Prior to Kelly, Tom was part of the founding team and the SVP of Strategic Initiatives with one of the market leading VMS and ATS providers. Tom has worked for a variety data warehouse firms in executive level positions and has been ranked as one of the most influential top 100 individuals (SIA) in staffing. He has sat on numerous advisory boards including SIA and Staffing.Org (both in initiatives to establish industry standards for KPIs). Tom has a BS from VA Tech in Industrial Engineering and Operations Research. ABOUT KELLYOCG KellyOCG, the Outsourcing and Consulting Group of workforce solutions provider, Kelly Services, is a global leader in integrated workforce solution delivery for clients worldwide, utilizing proven talent supply chain strategies. In addition to integrated solutions, KellyOCG specializes in Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), Talent Management Consulting, Career Transition and Executive Coaching & Development, and Executive Search. KellyOCG was named to the International Association of Outsourcing Professionals 2015 Global Outsourcing 100 list, an annual ranking of the world s best outsourcing service providers and advisors. Further information about KellyOCG may be found at kellyocg.com. 2015 Kelly Services, Inc.