Managing Staffing Agencies: To Tender or Not to Tender?

Many leaders in procurement and HR, may find the sourcing staffing agencies a challenging process.  In this article, we look at why the tendering process and why it doesn't work for staffing agencies. 

The Procurement Process

The first thing most procurement professionals will tell you is that you need to do a complete market scan to identify all the potential suppliers, then do a request for information (RFI) to whittle the list down, then a request for proposal (RFP) to choose a list of preferred staffing agencies, and then, finally, negotiate deeply discounted rates with your chosen staffing agencies.

If you are buying pens and paper, then, yes, a formally managed tendering process makes sense. 

However, this isn’t going to work for your contingent workforce program. In fact, the human capital element of traditional procurement processes can cause serious damage to your company’s ability to source, retain and manage contingent workers through staffing agencies.

In this article, we look at why this is the case, and what you should be doing instead. 

What is the Tendering Process in Procurement? 

Tendering is the process in which an organization in need of goods or services invites other parties to submit a proposal or bid to provide these goods or services. This information is formally referred to as a request for tender (RFT).

The RFT typically includes documents outlining the rules of the tender, such as the conditions of the tender, scope, evaluation criteria, and the conditions of the contract. This RFT is sent out to invite suppliers to submit their responses. 

The tender is a document that is submitted by the supplier in response to the RFT, which is essentially an offer to supply the goods or services that the buyer is looking to source.

Why the Tendering Process doesn’t work for Staffing Agencies

With decades of experience in the contingent workforce world, we've seen first-hand how the traditional procurement tendering process can damage contingent workforce program ROI. 

We’ve observed how procurement teams have run a formal sourcing process, manage a detailed RFP, decide on a set up preferred suppliers, and negotiate them hard to drive “cost savings” and yet contingent workforce results get increasingly worse over time.

Fulfillment rates drop, time-to-fill metrics slow down, and hiring managers become enraged as what they had before worked for them. In the end, the same result always happens. Hiring managers go rogue and hire contingent workers on their own terms and at their own rates, and preferred suppliers are left in the dust along with the company’s contingent workforce program. 

Improve How you Source Staffing Agencies with a VMS

While a full market scan and tender process makes sense in some cases, particularly for organizations that have never done a proper staffing agency review, we recommend businesses only use a tendering process as a last resort. 

Instead, your business should start by ensuring all of its contingent workforce information is in one place with the use of a vendor management system (VMS). This empowers you to analyze your staffing agency’s performance based on predetermined KPIs, giving you a good handle on how they are performing. 

When you can see all of your staffing agency data in one place and can evaluate how they are performing, you can begin to make smart supplier decisions that improve your contingent workforce ROI. You can start to remove your weaker suppliers, replacing them with staffing agencies that will better help your business to fill weak spots in fulfillment (such as skill type or location). 

Final Thoughts

By taking this approach instead of the traditional lengthy procurement tendering process, your business will significantly improve the ROI of your contingent workforce program and source staffing agencies dramatically faster. 

Additional Reading on Managing Staffing Agencies

Managing Staffing Agencies with a VMS | Everything You Need to Know

• The Benefits of a Vendor Management System
• Staffing Agency Software: 4 Things You Need to Know
• How to Choose the Right Staffing Agency for your Contingent Workforce Program
• 5 Ways a VMS Reduces Staffing Costs with Smarter Rate Card Management
• How a VMS helps Manage Staffing Vendors more Effectively
• How a VMS helps Measure Staffing Agency Performance
• 4 Key Benefits of Managing Staffing Agencies with a VMS
• The 8 Key Metrics to Measure Staffing Agency Performance
• 5 Best Practices to Manage your Vendors and Increase ROI
• 5 Reasons to Work with a Staffing Agency for your Contingent Workforce
  
• The Benefits of Partnering with a Light Industrial Staffing Agency
• How Does Staffing Agency Vendor Management Software Work?
• Managing Staffing Agencies: To Tender or Not to Tender
• 3 Best Practices for Managing Staffing Agencies
• What Key VMS Features do you really Need to Manage a Staffing Agency?
• Is your Staffing Agency Putting your Company at Risk?

About Conexis VMS

Conexis is an award-winning Vendor Management System built for organizations that want the power of enterprise software without the complexity or cost.

Leveraging the latest technology, Conexis delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored, personal service you require. Learn more about our Company and why organizations Choose Conexis VMS.

Why Leading Companies Choose Conexis VMS

Conexis VMS is purpose-built for organizations seeking to manage their contingent labor spend effectively. Here’s why we're the right choice:

• Our Advanced Technology: We have the most modern and advanced VMS tech stack available today starting with the latest codebase and extending to our lightning-fast AWS microservice
• Fast Deployment: Get up and running in weeks, not months
• Transparent Pricing: Flexible pricing with no hidden costs and no set-up fees
• White-Label Ready: Customize the platform with your brand
• Real-Time Insights: Make faster decisions with built-in analytics
• Audit-Ready Compliance: Store contracts, worker data, and rates in one secure hub
• Open APIs - Effortless Integrations: Connect Conexis VMS to your ATS, HRIS, Finance, or BI systems in record time. Enjoy seamless data flow and instant visibility across all your tools
  

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