I was recently in a discussion with an 10+ year incumbent Labor Service provider that turned out much better than I expected. Despite a challenging supply situation, we found a way to work together to address both our business needs.
If we turn back the clock to 2010, Mark Zuckerberg was Time Magazine Person of the Year and we were all very excited about this new device called an iPad. We started talking about renewable energy in a big way and 3D Bioprinters and the Google Driverless Car made their first appearance. Technology was getting really, really cool.
But labor was a commodity and with an unemployment rate of 9.7% smart machines were not going to be replacing human laborers any time soon.
The Labor industry was, and remains, large and fragmented. Labor services had not been strategic for P&G, in fact we had contracted through a Managed Service Provider (MSP) for most of our requirements. Fast forward and things have changed – a lot! US unemployment has been trending down and is currently at a low 3.7%;, much of the rest of the world where we operate shows a similar patern.
About two years ago, we realized we needed to change strategy. When you are faced with the challenge of not being able to ship your business due to lack of truck drivers, material handlers and on-line laborers, a spend that might have been classified as Non-Critical is now a Ricky Bottleneck. We needed to start paying closer attention to the labor market and eliminate the MSP layer between us and the Service provider. We needed to sort through the fragmentation and find a few Service suppliers with whom we could partner. Fortunately that Service provider of 10 years looked like they had the capability to meet our needs. The bottlenecked supply was impacting the agency as much as it was impacting us – finding a way to work together to attract and retain talent was a challenge we both faced.
While you may be hiring a Service Provider to do the lion share of the Service work, there is effort required on the part of the Client. This is where an Engagement Model is important. You need to define far more than the cost of the people doing the work, you need to consider how your company and the Service partner will work together to deliver the business needs. For example:
- How and when will teams interact?
- What kind of scorecard, survey or audit metrics will define performance?
- How might the Service change due to shifting business demands?
- How will you balance the client need for improved productivity and cost with the Service supplier need for revenue growth?
- How are you thinking about innovation and the cost of technology?
- What about the transition process – what actions are required at both at the start as well as the closure of the Service?
An Engagement Model recognizes the effort required for Service Delivery and Service Receipt. Outlining how the partners will work together ensures sustainability of the partnership, clarifies the Total Cost of Ownership to deliver the Service model and sets a strategic vision for the partnership that justifies a multi-year contract.
Do you have an Engagement Model for your Service? How can I help you?