Contingent Workforce is a Major Focus for Procurement

By Robert Handfield, Oct 11, 2016

The number of workers who are “contingent” is growing rapidly. Brian Hoffmeyer from IQ Navigator, a procure to pay solution, spoke recently at IBM’s Empower event on this trend, and the implications for procurement. I had the opportunity to sit in on this presentation and get some takeaways.

Several factors are driving the move towards contingent labor. Contingent labor spans everything from temporary warehouse workers, consultants, and project workers. Baby boomers are retiring. For a variety of reasons, they want to stay connected and want to continue working. Many retirees want to have a “hobby” – and still stay connected with their work! Millennials are a huge part of the workforce – 30% – and they want to move to expand their skill set, maintain a strong work-life balance – and research shows that they move around a lot, and on average work only for 16 months or so at a location. The third factor is the shortage of college-educated workers. There will be 30-40m shortage of workers – and 2/3 of companies believe this will impact their bottom line.

Companies themselves are also looking for the flexibility and agility that a flexible workforce provides. This allows them to accommodate surges in demand, especially in retail and other industries where a temporary workforce is needed.

There is demand for contingent workers on both sides of the equation – supply and demand. But 60% of the workforce is not well managed and unaccounted for in financial planning, budgeting and forecasting. Companies that Brian talks to can’t answer basic questions like how many people and who is accessing their systems. Nor can they answer strategic questions on whether they are paying the right amount for a project manager or how their performers are performing. There are data breaches, contract workers who set fire at airports, and misclassified workers resulting in fines. The worst example was the NSA hiring Snowden despite discrepancies and some clear red flags on his resume. He was a contractor, and the NSA didn’t follow contract procedures.

IQN Compass is an approach to vendor management systems that involves a SAAS solution to integrate with corporate systems that is easy to implement and operate. It helps to manage the procure to pay process for contingent labor – and helps to manage workflows. This creates a consolidated invoice based on their assignment – and the off-boarding system occurs so they can no longer badge into building – and reporting and analytics are used to monitor and manage workers.

Brian mentioned several case studies. A leading multinational bank wants to be able to have greater control over its non-employee workforce. They had no visibility into billing rates, no hiring manager access, no third-party invoicing, and no visibility into managed services resources. They were able to reduce back-office headcount and save over 1000 person hours through process automation, and show billing accuracy,

Contingent labor management will continue to be an issue that will impact the procurement landscape going forward.

This post originally appeared in Robert Handfield’s Supply Chain View from the Field

About the author

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Rob Handfield is the Bank of America University Distinguished Professor of Supply Chain Management at North Carolina State University, and Director of the Supply Chain Resource Cooperative. He also serves as an Adjunct Professor with the Supply Chain Management Research Group at the Manchester Business School.

The SCRC is the first major industry-university partnership to integrate student projects into the MBA classroom in an integrative fashion, and has had 15 major Fortune 500 companies participating as industry partners since 1999. Prior to this role, Handfield was an Associate Professor and Research Associate with the Global Procurement and Supply Chain Benchmarking Initiative at Michigan State University from 1992-1999, working closely with Professor Robert Monczka.

Handfield is the Consulting Editor of the Journal of Operations Management, one of the leading supply chain management journals in the field, and is the author of several books on supply chain management, the most recent being Biopharmaceutical Supply Chains, Supply Market Intelligence, Supply Chain Re-Design and Introduction to Supply Chain Management (Prentice Hall, 1999, 25,000 copies sold, and translated into Chinese, Japanese, and Korean). He has co-authored textbooks for MBA and undergraduate classes including Purchasing and Supply Chain Management 5th revision (with Robert Monczka) and Operations and Supply Chain Management 2nd revision (with Cecil Bozarth).

Handfield received the Emerald Citation of Excellence award in August 2011, for an article cited as one of the top 50 articles from the 300 top management publications worldwide that have had a proven impact since they were published. In 2009, he was nominated as an Honorary Fellow of Contract & Commercial Management (FCCM) by the International Association of Commercial and Contract Management. This honour is bestowed on individuals who have made exceptional contributions in the field of contracting and commercial management. Handfield is regularly quoted and has published op ed pieces, and is quoted in blogs and global news media such as the Wall Street Journal, Financial Times, the San Francisco Chronicle, Spend Matters, Microsoft Live, Ariba Live, Inc., CIO, CFO, the Supply Chain Management Review, and other media.