Spend Management and Category Focus

Our industry started off with a unique category management perfect storm that has allowed spend management to effectively be buried in the broader operations of the mature contingent labor program. To be clear, that is a good thing… for the temporary labor category. When it is just temporary labor in scope, then you absolutely should focus on the critical elements of that category – fulfillment, standardization, operational scaling and preferred suppliers – because doing so is what saves money and creates real, sustainable value… for the temporary labor category.

But not all categories of spend being managed in today’s contingent labor programs are similarly disposed to achieve spend management objectives through massive standardization and commoditization. We shouldn’t look at all categories of spend as just another variant of labor. Take management consulting as an example:

  • Is the management consulting demand in a large corporation standardizable like the job descriptions are in temporary labor categories? No, the requirements for management consulting projects and deliverables or service-based engagements are inherently unique.
  • Is the sourcing process for management consulting as standardizable as simple resume submissions and standard rate cards are for temporary labor categories? No, the supplier selection criteria and engagement pricing should follow the uniqueness and specificity of the requirements.
  • Is it possible to identify all the necessary vendors required to support all anticipated management consulting needs like the preferred vendor lists for temporary labor? No. While a small portion of SOW demand could be allocated to a defined vendor set, say as part of a source plan strategy, most future consulting needs are not even a glimmer in the demand holders’ eyes yet.

Well, you get the idea. SOW categories of spend are different from traditional labor categories. It can be confusing. The name of our contingent labor industry has become a bit of a challenge as we expand into non-labor focused categories of spend. But that should not prevent us from recognizing the differences in spend types the contingent labor program model can manage. See Spend-Labor Split Paradigm post for more detailed analysis.

Suffice it to say that VMSA Live knows the difference between labor categories and outcome-based categories. As such the conference agenda focuses on category specific solutions and not the one-size-fits-all approach of the old contingent labor program model. That’s why you will see the following variety of category coverage at VMSA Live this February:

  • Jim Holcomb from Wipro sharing his secrets of an unsuccessful MSP implementation en route to becoming one of the largest contingent labor programs in the world;
  • Mike Schiappa and Melanie Temkin from MetLife presenting their case for managing the management consulting category separately from their temporary labor program and why this strategy works for them;
  • Keith Wulffraat from Caterpillar sharing his approach to managing marketing spend and updating us on the expansion of their contingent labor program into SOW-based services;
  • Bob Hicks from Shell regaling our audience on how he and his team have expanded Shell’s internally managed, VMS-based contingent labor program scope to include a variety of SOW-based categories en route to becoming the largest SOW program in the world.

Join us next post for an update on the new Diversity Program at VMSA Live FL February 8-11.

Have a question or comment or simply want more SOW news and commentary? Tweet @SOWgeek, click to SOWgeek.com or email me at michael@sowgeek.com

 

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