Many recruitment businesses have opted to control their own supply chain by selecting an approved or preferred supplier list (PSL) of contractor accountancy and umbrella company service providers, and each will have had their own reasons for doing so.
Why have PSL (preferred supplier list)
There are a compelling range of benefits to be gained by recruiters who implement a PSL. Some use a PSL to manage compliance risks & to give their client’s reassurance that their extended supply chain is robust. Others offer a PSL to help contractors make informed decisions that further mitigate business risk, or to access commercial benefits which can be gained as a result of having a PSL in place. Either way, a PSL allows recruiters to access operational efficiencies which can be delivered by engaging with fewer suppliers more closely.
But what then? How do you ensure that the decisions made were the right ones, and remain relevant given changing business needs? How do you confirm that the processes agreed are operating as intended, and the business benefits expected are being realised? Some organisations build in regular supply chain reviews including clear quality measures and defined expiry and renewal procedures, but in our experience, these are a minority. More will have some form of periodic questionnaire process which their suppliers are asked to complete. Most agencies, entirely understandably given the other business needs, put a supply chain in place and will assume it is working effectively until presented with compelling evidence to the contrary.
How a PSL can benefit your business
Every business has different business priorities & internal resource capabilities so there isn’t a one size fits all answer. To assist those considering implementing a PSL, I have shared some examples of effective practices we have seen implemented by agencies we work with. Some, or all might be relevant for your business too.
- Clearly define and articulate your business objectives as they relate to your supply chain.
- Design and maintain MI which track performance over time against your business objectives.
- Design supplier KPI’s and service level agreements which drive your key business objectives and build them into your framework agreement.
- Clearly define and communicate the ways in which you prefer your suppliers to engage with you and your staff.
- Require regular MI from your suppliers which can be used to compare performance against your supplier KPI’s over time and in comparison, with each other.
- Collect and share regular feedback from your staff and contractors regarding supplier performance against your supplier KPI’s.
- Engage regularly with suppliers to review their performance across KPI’s, service user feedback etc. As a minimum, hold annual review sessions but quarterly meetings can offer better opportunities to act on feedback in a timely fashion, especially during the first few months of a new arrangement.
- Be prepared to replace a supplier should their performance not measure up with your expectations. That said, as the most benefit will come from well-established supply chains with deep understanding of your business needs, giving a supplier clear feedback and agreeing an action plan to defined timescales may pay dividends in the long run…
- Ensure your business processes and procedures are clearly defined and regularly reinforced internally via training. Being able to demonstrate you have a policy to mitigate key risks, and evidence that you regularly share and reinforce understanding is a valuable tool should you need to defend a claim or enforce a disciplinary process.
- Build in controls to police your processes and procedures;
- Track which suppliers are being engaged by contractors and cross-reference against your consultants – identify any trends where non-PSL members or one specific supplier is being used more than coincidence would allow for. If one of your business objectives is to derive a commercial benefit from your supply chain, then one or more staff who promote or prefer a non-PSL supplier are literally costing your business money.
- Where your process dictates that you share a list of all PSL members to your prospects, look to automate processes for distributing the list rather than relying on individual staff members. Where your process allows for a direct introduction to one or more supplier, ensure you have clear processes in place for gaining their explicit consent – this will help you comply with GDPR requirements.
- Audit email inboxes periodically for any mention of unauthorised incentives or hospitality which might raise an anti-bribery or criminal finance act concern.
- Positively reward staff who consistently keep to your policies and procedures – this represents the “carrot”
- Have clear disciplinary processes which you are prepared to enforce, up to and including dismissal for the most serious breaches. This represents the “stick”.
What additional value does PSL bring to your business?
Take advantage of offers to provide free training, advice and share knowledge. Yes, proactive suppliers will want to build individual relationships with your staff and map their potential opportunity across your teams and locations. This isn’t inherently bad! The benefits to be gained from effective collaboration can significantly outweigh the risks provided that you police your policies and procedures. Suppliers like Brookson are genuine experts in their field and can really support your business to understand legislation and trends which aren’t your day to day concern.
Please get in touch with our agency support team if you think Brookson can help your business to extract even more value from your supply chain.
Call: 01925 694 521