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Cost Efficiency and ROI of Managed Employee Recruitment Strategies

Talent recruitment is at the heart of every successful business. However, the process is evolving, with more businesses turning to managed employee recruitment strategies due to their cost efficiency and outstanding ROI. The simplicity, accuracy, and effectiveness of these strategies undeniably contribute to their popularity. This blog explores the importance of cost-effective staffing, the immediate benefits versus long-term savings of managed employee recruitment services, ways to calculate the ROI, and how diverse industries can reap the benefits of these strategies.

Understanding the Importance of Efficient Staffing Solutions

An organization’s success heavily relies on having the right people and skills to meet its strategic goals. Hence, putting in place efficient staffing solutions to attract, recruit, and retain top talent is critical. Managed staffing services leverage external expertise and the latest HR technology to provide effective recruiting strategies that save costs and deliver results.

Immediate Cost Benefits vs. Long-Term Savings of Managed Employee Recruitment Strategies

Immediate Cost Benefits

Rapid Hiring

Managed staffing services utilize technology to automate and accelerate the hiring process, filling open positions in a fraction of the time compared to traditional recruiting. This faster turnaround translates into immediate and substantial savings related to stopgap staffing, productivity losses from vacant roles, and missed revenue growth opportunities that accumulate daily when positions stay unfilled.

Skill Diversification

By leveraging recruiters’ wide industry connections and targeted job sites, managed staffing services expand and vary the talent pool to include qualified candidates open to new roles but not actively looking. This pipeline to overlooked experts with key skills immediately improves business operations that would otherwise struggle without the right talent. Quickly securing these specialized individuals reduces costs compared to typical long searches required to find rare experts.

Long-Term Savings Benefits

Reduced Turnover Costs

Managed staffing services emphasize finding the right talent-job alignment, using advanced analytics to carefully match recruits with roles where they can grow and succeed. Superior candidate fit contributes to lower turnover rates over the long-term. By maximizing retention, these services substantially cut costs associated with recruiting, onboarding, training replacements, and productivity losses typical during staff transitions.

Enhanced Productivity and Employee Retention

By carefully matching candidates to roles they are likely to thrive in, managed staffing services onboard talent that is happier, more engaged, and better suited to a company’s needs. This higher-quality talent acquisition results in a more motivated and productive workforce over the long term. Increased productivity and retention reduce hiring, onboarding, and operational costs while sustaining a dynamic, self-perpetuating talent pipeline powered by passionate referrals.

Candidate Misrepresentation

In some cases, staffing agencies have overstated candidate credentials or hid negative background details to make placements. Such misrepresentations ultimately waste clients’ time and money. Deterring such practices requires:

  • Independently verifying candidate backgrounds
  • Conducting skill assessments before onboarding
  • Seeking references beyond those provided

Adding fraud protection language into the MSP agreement and conducting audits also helps flag any discrepancies early. Following clear onboarding protocols will reduce overall risk.

Looking to take advantage of these cost-saving opportunities with your employee recruitment strategy? Learn how Velocity Procurement’s staffing solutions can support your hiring needs.

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Calculating the ROI of Your Managed Employee Recruitment Strategy

Determining the ROI of your managed employee recruitment strategy is key to understanding its true value to your organization. Calculating ROI allows you to quantify the costs and benefits associated with your chosen recruitment approach to see if it is paying off.

Why ROI Is Relevant for Staffing Services

For companies utilizing external staffing services, being able to validate your investment through ROI metrics is particularly important. Since recruitment can be a major expense, you want to ensure those costs are outweighed by the gains in talent acquisition and other benefits.

Tracking ROI over time also allows you to spot trends and determine if changes need to be made to your recruitment strategy to improve efficiency. Having clear ROI measures helps keep recruitment efforts aligned with organizational goals.

Key Components for Calculating ROI in Employee Recruitment

When determining the ROI of your recruitment approach, there are several key metrics to consider:

  • Time-to-Fill Metrics
  • Quality of Hire
  • Productivity Gains
  • Training and Onboarding Costs
  • Turnover Costs
  • Employee Satisfaction and Engagement
  • Benchmarking Data

Time-to-Fill Metrics

One factor is how quickly your staffing provider can fill open roles with qualified candidates compared to other methods you may use. Faster filling of critical positions saves money through increased productivity and output.

Quality of Hire

The capability of new hires to perform well in their roles also impacts ROI. Quantifying metrics like performance scores, output, evaluations from managers, and promotions or expanded responsibilities can indicate an excellent quality of hire.

Productivity Gains

By calculating how productivity changes with an improved talent pool from your recruitment strategy, you can attribute monetary value to those gains. This requires data on metrics like revenue per employee or output per employee before and after improved hiring.

Training and Onboarding Costs

If talent from your updated recruitment process requires less investment in training and onboarding to become productive, those are tangible cost savings to factor into ROI.

Turnover Costs

If your new strategy results in lower employee turnover, tallying those cost savings is also vital. Calculate factors like lost productivity during role changeover, expenses for separation, recruitment, training, etc.

Employee Satisfaction and Engagement

Having metrics around the satisfaction, engagement, and happiness of talent hired through new recruitment strategies can correlate to ROI benefits like better retention and performance. Survey scores and participation rates in culture initiatives can be helpful to track.

Benchmarking

Finally, comparing your metrics over time and against industry benchmarks contextualizes the ROI picture. Seeing how you fare against averages in time-to-fill, cost per hire, turnover rate, and other areas shows if your program is successful.

How Various Industries Can Benefit From Managed Employee Recruitment Strategies

While the details may differ, there are tangible ROI benefits to a managed recruitment approach across many industries. Some top examples include:

  • Technology: With constant innovation and growth, tech companies rely heavily on talent acquisition. Specialized staffing services allow them to tap niche skill sets and act quickly to secure top candidates in a competitive hiring landscape.
  • Healthcare: This industry struggles with talent shortages and tough regulatory compliance for hiring. Outsourced solutions help them fill critical roles faster while reducing training and onboarding needs.
  • Manufacturing: Manufacturing output ties directly to workforce productivity, so optimized hiring and retention are key. Custom recruitment approaches based on their precise skills requirements give them an edge.
  • Retail: Retail has high turnover, seasonal peaks and valleys. Managed services allow them to rapidly scale talent needs for peak periods, lowering seasonal staffing costs and helping retain top year-round talent.
  • Financial Services: Regulations and client security needs make hiring uniquely complex in banking or finance. Customized recruitment solutions aid compliance and onboard top advisors faster to enable asset and revenue growth.
  • Construction: With fluctuating project pipelines, construction firms need to flexibly staff skills. Advanced analytics applied through managed services predict upcoming needs, enabling them to have required roles filled ahead of schedule.
  • Professional & Business Services: Consulting, marketing, HR, and similar fields cannot afford productivity lags from open roles. Just-in-time, highly specialized hires can prevent gaps and add revenue with each filled post.

Find a Streamlined Employee Recruitment Strategy With Velocity Procurement

Velocity Procurement offers comprehensive managed staffing services that optimize and accelerate recruitment through proprietary analytics and algorithms. By automating labor-intensive tasks and expanding access to specialized talent, we help you maximize ROI and achieve cost savings with your employee recruitment strategy. Contact our team today to learn how our technology-enabled solutions and dedicated expertise can reduce your cost per hire and cut hiring turnaround times.

Compliance & Legal Aspects With Managed Service Provider Staffing

When it comes to managed service provider staffing, understanding legal compliance and related ethical issues is crucial. We’ll cover everything from the functional process of MSP staffing to the dilemmas that arise and how to best navigate them. Lastly, we explore strategies for overcoming challenges and how to find effective staffing solutions.

How Managed Service Provider Staffing Works

Managed service provider staffing refers to an arrangement where a business outsources its contingent workforce needs to an external staffing partner. The partner, often called a managed service provider, oversees all aspects of managing contingent labor from sourcing and recruiting to compliance and payment.

Some key aspects MSP staffing include:

  • Establishing a managed service agreement that outlines the services, terms, metrics, and goals of the engagement
  • Leveraging the MSP’s talent pool and recruitment capabilities to fill open roles quickly
  • The MSP handles candidate screening, interviews, assessments, hiring, and onboarding based on the client’s needs
  • Ongoing workforce management, including time tracking, compliance, worker safety, performance reviews, etc.
  • Consolidated invoicing and customized reporting on staffing costs and utilization

MSPs aim to provide greater workforce visibility, risk mitigation, cost optimization, and relief for overburdened HR teams. Studies show that the vast majority of companies partnering with MSPs have seen improved workforce productivity, cost savings, and worker quality.

As talent shortages persist while hiring needs continue rising, businesses are expected to turn more to contingent staffing solutions like MSPs to access specialized talent.

Ethical Dilemmas in Managed Service Provider Staffing & How to Deal With Them

Conflicts of Interest

As third-party vendors, MSPs can sometimes face conflicts of interest between serving the best interests of the client while also protecting their own profits or business relationships. Examples include:

  • Placing a candidate to optimize the MSP’s margins rather than finding the best fit
  • Hiding problematic or low-performing staff to protect the business relationship

To mitigate such risks, clients should have transparency into markup rates, conduct audits, monitor KPIs, and keep open communication channels with the MSP to address issues promptly. Contractual language requiring the MSP to disclose potential conflicts can also align incentives properly.

Confidentiality

MSPs gain extensive access to a client’s personnel data, trade secrets, compliance issues, and other sensitive information. Lack of discipline around confidential data handling could lead to leaks, theft, or breaches.

Best practices include:

  • Mandating data security training for all MSP staff
  • Requiring third-party risk assessments of the MSP’s data handling policies
  • Using security tools like access controls and encryption to limit exposure

Continuous monitoring for unusual data access combined with strong confidentiality clauses in the MSP agreement can mitigate these issues.

Diversity and Inclusion

Some MSPs have faced criticism about perpetuating representation gaps or biased hiring patterns. Managing diverse talent requires a nuanced understanding of sourcing pipelines and advancement barriers facing minority groups. Lack of internal inclusion also risks program efficacy and worker performance.

Organizations can drive positive change by:

  • Auditing the MSP’s diversity demographics
  • Setting representative workforce targets
  • Investing in specialized community partners
  • Prioritizing minority-owned MSP agencies

Expanding inclusion requirements in contracts and close performance oversight also heightens accountability for the MSP to deliver on diversity and inclusion commitments.

Candidate Misrepresentation

In some cases, staffing agencies have overstated candidate credentials or hid negative background details to make placements. Such misrepresentations ultimately waste clients’ time and money. Deterring such practices requires:

  • Independently verifying candidate backgrounds
  • Conducting skill assessments before onboarding
  • Seeking references beyond those provided

Adding fraud protection language into the MSP agreement and conducting audits also helps flag any discrepancies early. Following clear onboarding protocols will reduce overall risk.

Overcoming ethical hurdles doesn’t need to be complicated. Explore Velocity Procurement’s managed service provider staffing solutions to learn how we can keep you properly staffed and compliant.

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Legal Frameworks Governing Managed Service Provider Staffing

MSP arrangements operate within a complex web of employment laws, data privacy regulations, localization rules, and compliance standards. Understanding the key legal frameworks is essential to ensure program success and risk mitigation.

Regional Tax Laws & Local Tax Regulations

Staffing arrangements often span geographic boundaries across cities, states, and countries—each with its own localization needs, including:

  • Payroll, income, and business taxes
  • Labor law variances
  • Licensing requirements
  • Statutory benefits
  • Compliance with local contracts

A compliant workforce requires vetting all localization needs upfront and working closely with local partners to adapt protocols market by market.

National Regulations

In addition to local laws, MSPs must adhere to broader regulations governing worker rights, data handling, background checks, safety protocols, and more. Industries like healthcare, energy, finance, and aerospace often carry strict legal obligations as well.

Staying compliant demands regular training and partnerships with specialized legal advisors to interpret requirements accurately. Nationwide audits and centralized policies ensure consistency across dispersed workforces operating coast to coast.

International Regulations

For large, multinational workforce programs, mega vendors need to consider global standards, including:

  • OECD guidelines on MNEs and multistakeholder due diligence
  • UN Guiding Principles on Business & Human Rights
  • ILO conventions governing fair labor practices
  • ISO quality management standards
  • Global data protection laws like GDPR

Key Areas of Legal Compliance

When providing managed service provider staffing, there are three key areas of legal compliance to focus on: employment laws, data protection and privacy regulations, and industry-specific requirements.

Employee Rights, Obligations, and Labor Standards

Staffing agencies must comply with all applicable laws related to employee rights and obligations. This includes laws around minimum wage, overtime pay, rest and meal breaks, discrimination, harassment, and termination notices. There may also be specific labor standards related to staffing agencies, such as limits on temporary employee tenure or required benefits.

It is critical that staffing agencies keep up with all federal, state, and local employment laws and factor compliance into their managed staffing services. Clear policies and training for recruiters and hiring managers are essential.

Data Protection & Privacy

Stringent data protection and privacy regulations like GDPR in the EU have significant implications for global staffing providers. Compliance requires getting consent for data collection, implementing cybersecurity controls, only collecting necessary employee information, establishing lawful bases for processing, and ensuring data portability and the right to erasure.

Staffing agencies must update their agreements, policies, procedures, systems, and training to comply with rapidly evolving global, regional, and national data protection laws. Audits and collaboration with legal counsel are critical.

Industry-Specific Legal Requirements

In heavily regulated industries like healthcare and financial services, there are often stringent staffing provider requirements related to background checks, continuing education, licensing, technology controls, and more. Failure to comply can result in heavy penalties.

Conducting thorough due diligence and closely tracking industry regulations is essential for staffing agencies in these verticals. Customized legal reviews are recommended.

Strategies for Navigating Legal & Compliance Challenges

Managing the complex legal compliance environment poses significant challenges for managed service provider staffing. Strategies like audits, expert collaboration, and technology integration are critical.

Regular Legal & Compliance Audits

Conducting regular audits of policies, procedures, systems, and controls related to staffing provider compliance can identify gaps and risks. Internal cross-functional reviews as well as third-party audits of areas like employment practices, cybersecurity, and industry-specific requirements should be performed annually.

Collaborating With Experts

Given the complex regulatory landscape, it is essential for staffing providers to consult labor and employment lawyers, data privacy specialists, and compliance experts familiar with their verticals. Collaborating with legal and compliance teams can also provide valuable insights.

Integrating Technology & Compliance Management Tools

Systems for HR information, applicant tracking, vendor management, and specialized compliance management can automate, track, and enforce policy and legal requirements. Integrating systems and data also helps with audits.

Find an Effective Staffing Solution With Velocity Procurement

Make sure your staffing solutions meet all compliance standards with Velocity Procurement’s managed staffing programs. Our dedicated team and cutting-edge technologies allow you to focus on your core business without the burden of compliance. Contact Velocity Procurement today for a managed service provider staffing strategy tailored to your needs.

Human Touch in an Automated World: Workforce Staffing Solutions With a Personal Touch

The role of human touch in business—particularly in workforce staffing solutions—has never been more critical. Technology substantially impacts the professional landscape, leading to changes in the dynamics and feel of the workspace. Still, the human factor continues to hold a significant place and delivers unique value. Through this blog, we’ll delve into the evolving relationship between technology and the fundamental human element involved in workforce staffing solutions. We’ll take a detailed look at how automation impacts the workforce, how it shapes human connections, and why the human touch remains paramount in maintaining an engaged, productive, and harmonious workforce.

The Impact of Automation on the Workforce

The rise of automation and AI is disrupting work by replacing human jobs with machines, which can efficiently perform repetitive, routine tasks like manufacturing and cashiering. This forces companies to rethink their strategy. However, while certain jobs will decline, new roles maintaining systems will emerge. There’s also an opportunity for more creative, human-centered jobs catering to the need for personal connections as automation handles rote work.

The Evolution of Human Interaction and the Rise of Automation in the Workplace

Technology has been reshaping how we interact in the workplace for decades. However, the pace has accelerated rapidly. Communication has evolved from face-to-face to phone calls, email, and instant messaging, and is now primarily conducted via collaboration platforms.

Simultaneously, more and more job functions are being handed over to machines. Order taking, tracking deliveries, transcribing meetings, analyzing data—these tasks are now reliably and accurately performed by AI.

As a result, professionals today spend more time engaging with technology than directly with colleagues and customers. While efficient, over-reliance on technology carries the risk of diminished human connections, empathy, and morale.

Adapting to Technological Advancements

As automation changes work, companies should reskill displaced workers and create roles leveraging both technical abilities and human strengths like creativity and empathy. Professionals need continuous self-improvement and capability diversification to complement emerging technologies. Additionally, preserving human connections in an increasingly digital world requires conscious adaptations to workplace policies and culture – more in-person collaboration, reinforcing team building, and maintaining creative spaces for interpersonal interactions.

The Future of Work in the Technological Era

Experts have varying visions for how work will evolve alongside exponential technology growth. But all signs point to more flexible work arrangements. Core human abilities like creativity, collaboration, and empathy, as well as roles leveraging diverse competencies, will be increasingly valuable.

How Technology Shapes Human Connections

Digital transformation has created tremendous opportunities for connection—allowing people across geographies to communicate and collaborate instantly. Platforms like email, IMs, video chat, and cloud-based document sharing are ingrained in everyday work.

However, concerns around deteriorating attention spans, empathy, and workplace isolation stemming from technology overuse highlight why cultivating in-person relationships is vital for employee fulfillment and organizational health.

The Impact of Automation on Workplace Dynamics

Widespread adoption of AI and automated systems reshapes workplace dynamics and culture significantly. As tactical and repetitive tasks are ceded to technology, roles evolve to focus more on strategy, creativity, and the human element.

Organizations must foster connections between teams and individuals that might operate more independently without as much routine overlap. Intentional team building and bonding opportunities counteract potential isolation from automation.

Leaders must watch for deteriorating morale, fulfillment, and culture with increased digitization and put mechanisms in place to maintain strong interpersonal relationships, empathy, and overall health.

Psychology and Sociology in Professional Settings

Empathy and Emotional Intelligence in the Workplace

As work becomes increasingly tech-enabled, skills like empathy and emotional intelligence will only grow in importance for leadership and customer/client-facing roles.

Empathy allows managers to coach and motivate team members more effectively. Customer service and sales professionals who demonstrate emotional intelligence foster loyal relationships and repeat business.

Companies will need to prioritize hiring for these “soft skills” and training employees accordingly through workshops, coaching, and embedding desired behaviors into core values and culture.

Navigating Social Dynamics in a Digitized World

Humans are inherently social creatures—making friends, connections, and small talk does not come naturally in digital mediums. Yet casual collisions by the water cooler decrease with remote work and scattered teams.

Organizations must intentionally create opportunities for social bonding and inject personality, humor, and casual interactions into online gatherings. Guarding against feelings of disconnection and isolation protects well-being and performance.

Building Stronger Teams Through Personal Connections

In-person team-building exercises, showing vulnerability/empathy, flexible policies accounting for life circumstances, and non-work conversations all help teams transcend task-based relationships into more cohesive units.

The human element prepares teams to productively navigate conflict while preventing disengagement—critical drivers of performance in complex, creative initiatives.

Struggling to balance the interplay between automation, technology, and the human touch within your workforce staffing solution? Reach out to the Velocity Procurement team today for a managed staffing solution that helps your team guarantee success.

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The Need for Human Touch in Workforce Staffing Solutions

As automation and technology continue to transform the workplace, maintaining meaningful human connections is more important than ever. When it comes to workforce staffing, solutions that prioritize empathy, emotional intelligence, and relationship-building can have a profoundly positive impact.

Working With a Managed Staffing Provider

Partnering with a managed staffing provider like Velocity Procurement that emphasizes interpersonal skills allows companies to leverage expert support across talent acquisition. These partners serve as an extension of a company’s HR department by handling sourcing, screening, interviewing, hiring, onboarding, training, and more. Velocity’s account managers aim to develop authentic partnerships with each client by taking the time to deeply understand unique business needs and challenges. This enables them to pinpoint growth opportunities and map out data-driven hiring plans to move the needle. The human touch manifests through dedicated account management, consultative needs assessments, and customized strategy development.

A Ripple Effect on Company Morale

Bringing in an empathetic managed staffing partner positively impacts company morale in tangible ways. As open roles get filled by qualified candidates who align with company culture, teams become complete. This alleviates pressure across groups, improves collaboration, and leaves employees feeling supported by leadership.

Leveraging a Happy Workplace as a Selling Point

Research shows happy workplaces see less absenteeism, stronger retention, better creativity, and higher productivity, directly translating to improved long-term profit margins. Managed staffing providers like Velocity Procurement can also leverage data analytics to benchmark supply chain operations against industry standards, allowing companies to identify inefficiencies and optimize headcount. This drives optimal productivity at the right price point.

A Closer Look at the Velocity Procurement Approach

Knowledge Transfer Program for Seamless Transitions and Operational Continuity

At Velocity Procurement, our workforce staffing solutions emphasize seamless onboarding and training programs to ensure your placed talent and hiring manager partners alike feel fully supported. Our dedicated account managers run in-depth knowledge-sharing sessions to provide clients with value beyond just talent placement. These structured training programs offer best practices, benchmarks, and marketplace intelligence to empower hiring managers with decision-making insights related to recruitment operations, budget optimization, and more.

Full-Scale S2P Services

With extensive category expertise and marketplace intelligence, Velocity Procurement delivers customized Source-to-Pay solutions tailored to unique business objectives. This includes spend analysis, supplier selection, rate benchmarking and negotiations, contract lifecycle management, PO and invoice management, workforce staffing solutions, and more.

Personalized, Value-Driven Partnerships

Velocity Procurement aims to cultivate genuine, long-lasting partnerships built on trust and transparency with each client. We take a highly collaborative, consultative approach that prioritizes truly understanding unique business needs and objectives. By taking the time to pinpoint clients’ strategic growth opportunities and challenges, our team provides insight-driven talent solutions tailored to drive meaningful value and positive impact on your overall operations.

Expertise, Powerful Tools, and S2P Technology Solutions

By partnering with Velocity Procurement, clients benefit from the strategic combination of personalized talent advisory services, leveraging both human expertise and state-of-the-art recruitment tools and technologies. This enables optimized, streamlined hiring backed by data-driven insights to find the right talent at the right price. The end result is improved quality of hires, faster fulfillment, enhanced workplace productivity, and bottom-line savings.

Find a Workforce Staffing Solution That Aligns Your People, Processes, and Technology With Velocity Procurement

As automation changes work, the need for a workforce staffing solution that balances human touch and technology becomes increasingly important. While powerful tools and systems can drive critical process efficiencies, losing sight of empathetic support can severely hinder workplace culture, staff morale, and performance. At Velocity, we strive to pair scalable workforce staffing solutions with dedicated talent advisory services focused on understanding your unique needs. Contact our team today for leading support and workforce staffing solutions that help your team thrive.

Best Practices for Streamlining Recruitment and Staffing With Managed Services

In an increasingly competitive talent market, organizations worldwide are exploring new ways to streamline their recruitment and staffing operations. One such strategy that has gained recognition is leveraging managed services. In this blog, we’ll explore the role managed services play in the recruitment landscape and how you can maximize its impact within your organization.

Understanding the Role of Managed Services in Recruitment And Staffing

Managed services provide strategic support to organizations in managing parts or all of their talent acquisition process. They offer expertise, technologies, and dedicated recruitment teams to help companies effectively attract, source, assess, and hire the best talent.

Defining Managed Services

Managed services involve outsourcing certain business functions to an external service provider. In talent acquisition, this typically includes:

  • Sourcing and attracting qualified candidates
  • Screening resumes
  • Conducting interviews and assessments
  • Extending job offers
  • Onboarding new hires

The Role of Managed Managed Services in Talent Acquisition

Managed service providers play a crucial role in the recruitment and staffing process, including:

  • Developing an employer brand and recruitment marketing strategy to attract top talent
  • Posting jobs and promoting openings through diverse channels
  • Source potential candidate leads through databases, social media, and other approaches
  • Screen applicants with AI tools and manual reviews to identify best fits
  • Schedule and conduct interviews, assessments, and selection procedures
  • Extend job offers and negotiate start dates and compensation

This expands the capabilities of your internal teams to fill openings faster and build strong talent pipelines.

Managed Services and Digital Transformation in Recruitment and Staffing

Managed recruitment and staffing services provide you with access to cutting-edge technology that simplifies and streamlines your recruitment process. These resources may include:

  • Predictive analytics to forecast hiring needs
  • AI-enabled chatbots for candidate engagement
  • Automated resume screening and sentiment analysis
  • Video interviewing and online assessments
  • HR chatbot and conversational AI for onboarding

This digital transformation expands reach, improves experiences, reduces time-to-fill, and enhances the quality of hire.

Best Practices for Implementing Managed Services in Recruitment and Staffing

To maximize the value of your recruitment and staffing processes, you need a robust strategy that improves time-to-hire, lowers staffing costs, and helps you run a more effective onboarding process. Here are a few key best practices for improving your recruitment and staffing processes with managed solutions.

Identify the Right Managed Service Provider for Your Recruitment and Staffing Needs

Choosing the right managed service provider is essential for streamlining recruitment and staffing via managed services. You need to assess their industry expertise, technical innovation, cultural fit, service breadth and scalability, analytics maturity, and future vision. Conducting thorough due diligence enables you to select a partner that aligns with your values and needs—both current and forthcoming. This helps you ensure a mutually successful and sustainable partnership that is poised for transformational growth.

Incorporate Robust Data Analysis

Leading managed services providers, like Velocity Procurement, empower data-driven decision-making through performance dashboards that track key metrics, analytics that spotlight top talent sources and recruitment snags, and predictive data that guides strategic hiring plans. By leveraging insights on quality of hire, time-to-fill, and more, you can gain a comprehensive view that informs better choices and enhanced outcomes across the recruitment and staffing process.

Realize the Power of AI and Automation

By automating high-volume administrative and transactional recruiting tasks while expediting core processes like sourcing, screening, assessing, and onboarding, emerging technologies empower managed services providers to rapidly transform the candidate journey through data-driven personalization at scale. This amplification of recruiter productivity and hiring efficiency, velocity, cost-effectiveness, and quality is achieved by leveraging automation to engage candidates in more meaningful ways while generating actionable insights.

Integrate Managed Services With Your Existing People, Processes, and Technologies

To effectively integrate managed recruiting and staffing services, you should start by assessing your existing HR systems to pinpoint workflow or technology gaps an MSP can fill. Next, determine which talent acquisition processes to outsource or keep in-house based on your strategic priorities. Clearly delineate responsibilities between internal recruiters and MSP staff by mapping hand-offs and checkpoints into efficient workflows underpinned by platforms enabling seamless data exchange. Provide training to maximize the adoption of MSP capabilities supporting talent goals. Close collaboration through the transition ultimately sets up the partnership for success.

Continuous Skill Training and Development

Working with a leading managed service provider allows you to invest in employee learning, enabling your team to perform at the highest level as they grow into their role. This may include:

  • Access to training on core competencies
  • Insights into the latest human resources practices and trends
  • Education in diversity, equity, and inclusion (DEI) and ethical compliance
  • Guidance on emerging recruitment technologies and AI tools
  • Opportunities for professional development

Establish KPIs for Your Recruitment and Staffing Processes

It’s essential to establish key performance indicators to gain insight into process efficiency, hiring outcomes quality, and return on investments. Consider tracking these metrics with your managed service provider to ensure improved business insight and strategic decision-making:

  • Time-to-fill for open positions
  • Cost per hire/recruitment
  • Candidate pipeline strength and diversity
  • Offer acceptance rates
  • New hire retention and performance

At Velocity Procurement, we strive to provide robust staffing services that help you streamline your recruitment and staffing processes, lower costs, and run a more effective organization. Learn more about how our solutions can support your procurement efforts today.

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The Benefits and ROI of Using Managed Services to Streamline Recruitment

Implementing managed services for recruitment and staffing can provide numerous benefits in terms of return on investment (ROI). Some of the key advantages include:

Cost-Effectiveness

By consolidating recruitment vendor management, leveraging purchasing power, optimizing talent acquisition processes, automating high-volume hiring tasks, and deploying insightful reporting tools, managed services provide organizations with economies of scale that streamline recruitment spend. Centralizing and enhancing oversight of hiring via a managed services partner minimizes redundant investments, makes recruitment costs transparent, and drives data-backed talent acquisition decisions—ultimately optimizing budget clarity and ROI across the hiring process.

Improved Time-to-Hire

By facilitating faster engagement with top talent suppliers through streamlined procurement, expanded and expedited job posting distribution, accelerated approval and scheduling cycles, and access to shared candidate pools and talent communities, managed services optimize talent acquisition workflows. This enables organizations to tap expansive talent networks with speed and efficiency – vastly improving hiring lead times.

Improved Recruitment Efficiency

Partnering with a managed services provider standardizes and structures the hiring process through templates, workflows, focused staffing, and shared data tracking. By centralizing and optimizing recruitment this way, organizations can boost productivity, access better analytics, and prevent duplicated efforts across teams, redirecting HR to more strategic projects.

Prepare for the Future of Recruitment With Managed Services From Velocity Procurement

As hiring grows more complex, success requires optimized, AI-enabled processes, direct access to specialized talent pools, and elevated candidate experiences. Velocity Procurement provides integrated, forward-looking recruitment services grounded in these emerging needs. By partnering with us for your talent acquisition managed services, you gain a strategic advisor able to evolve your recruitment strategy amid shifting markets. Contact us today to transform your approach.

10 Things You Need to Know About Managed Staffing Services

In a modern business landscape characterized by increased competition, evolving consumer needs, and unpredictable economic climates, organizations must constantly adapt to stay relevant. Staffing, a key component of an organization’s operations, can often present significant challenges. It requires strategic and comprehensive management to ensure efficiency, productivity, and overall business continuity. Managed staffing services have emerged as a solution, providing cost-effective, personalized, and skill-focused staffing solutions. This article uncovers the critical aspects of managed staffing services and provides insight into what organizations need to know to maximize their benefits from these services.

Key Components of Managed Staffing Services

Managed staffing services provide organizations with access to qualified temporary or contract workers on an as-needed basis. Some key components that set these services apart include:

  • Vendor management: The staffing provider handles all aspects of managing contingent talent, from sourcing and screening to onboarding, training, and offboarding.
  • Reporting and analytics: Robust reporting provides insights into workforce utilization, spending, and other key metrics to inform better decision-making.
  • Technology integration: Integration with applicant tracking and VMS systems enables seamless requisition and worker management.
  • Compliance expertise: Providers ensure hiring and employment practices adhere to labor laws and regulations.
  • Scalability: Organizations can flex their contingent workforce up and down to meet changing business demands.

Additionally, leading managed services providers operate as strategic partners to their clients, providing guidance on process optimization, change management, and programs to boost engagement and productivity.

Benefits of Opting for Managed Staffing Services

Making the decision to outsource all or part of the staffing function offers organizations several compelling advantages:

Ensuring Business Continuity

With extensive networks and recruitment expertise, managed services providers can rapidly deliver qualified workers to fill open positions. This prevents workflow disruptions when permanent staff leave, or workload spikes occur.

Specialized staffing firms also maintain large pools of pre-vetted contingent talent. By tapping this readily available talent pool, organizations can continue operations smoothly despite unpredictable staffing needs.

During times of business transition or transformation, the flexible support of an external staffing partner enables organizations to focus resources on core initiatives rather than recruiting.

Access to Skilled Resources

Managed staffing services grant access to expanded skill sets that may not reside internally. Providers source professionals from across various industries and markets using far-reaching networks.

This allows organizations to launch projects requiring niche expertise without enduring lengthy recruitment cycles for scarce skill sets. It also provides an influx of fresh perspectives from talent with exposure to diverse processes and technologies.

By eliminating the need to maintain rarely used skill sets internally, managed services allow focus on nurturing the core competencies that differentiate the organization.

Cost-Effective Staffing Solutions

Studies show that contingent labor costs around 20-30% less than permanent employees when considering benefits, overhead, and HR administration. Managed services provide the means to maximize these savings.

Staffing suppliers have the specialization to promptly deliver required skill sets with maximized cost efficiency. Custom solutions like pay-as-you-go and fixed-fee models also allow organizations to gain financial predictability and cut extraneous expenses.

The mix of permanent and contingent talent can be continuously optimized via provider analytics. This leads to higher productivity and minimized labor spend over multi-year engagements.

 

At Velocity Procurement, we strive to be an extension of your team, helping you streamline and optimize your procurement functions, staffing needs, and more. Explore our staffing and managed services to learn more about how we can support your operations.

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What You Need to Know About Managed Staffing Services

1. Avoid a One-Size-Fits-All Approach

Seeking a personalized staffing solution tailored to your organization’s specific needs is key to success. One-size-fits-all approaches often fail to address unique requirements and challenges. Here are a few things to consider regarding your organization’s unique needs and staffing requirements:

  • Conduct a thorough evaluation of your existing talent gaps, skills shortages, and other workforce challenges.
  • Partner with a managed staffing service provider that takes the time to understand your business, culture, and objectives.
  • Look for custom recruiting, on-boarding, training, and other programs designed for your situation.

2. Know Potential Drawbacks and How to Mitigate Them

While managed staffing services offer many benefits, there are some potential drawbacks to be aware of:

  • Higher upfront costs compared to in-house hiring.
  • Less oversight and control over contingent talent.
  • More effort required for contingent workforce integration and management.

However, the right partner can help mitigate these risks through:

  • Competitive and flexible pricing models to control costs.
  • Ongoing talent monitoring, audits, and open communication channels.
  • Change management and talent engagement initiatives.

3. Achieve Cost-Effectiveness Through Transparent Pricing Structures, Performance Metrics, and KPIs

Ensuring a managed staffing program delivers ROI requires cost transparency and accountability.

  • Clearly understand fee structures, markups, and what’s included.
  • Agree to performance metrics, KPIs, and regular reviews/audits in the contract.
  • Benchmark costs against industry standards.

This enables insight into the value delivered and opportunities to refine the program for optimal efficiency.

4. Embrace Training Programs and Employee Engagement Strategies to Enhance Workforce Skillsets and Productivity

A talent skills gap is one key driver for managed staffing. Partners can fill urgent open roles, but long-term success requires robust training and engagement programs. These may include:

  • Personalized onboarding and role induction initiatives.
  • Ongoing skills development aligned with company needs.
  • Tactics to integrate contingent talent into the organizational culture.

This enhances workforce capability, innovation, and productivity over time.

5. Mitigate Risks and Ensure Compliance With Regular Audits and Assessments

While staffing partners manage many talent acquisition elements, organizations retain accountability for compliance. Ensure governance with:

  • Stringent partner selection criteria encompassing all compliance needs.
  • Clear roles and responsibilities related to compliance detailed in contracts.
  • Set schedules for audits and reviews of partner performance.

Proactive oversight is key to reducing compliance burdens internal teams otherwise bear.

6. A Strategic Partnership Can Help You Achieve Long-Term Alignment With Your Business Strategy

The most effective managed staffing arrangements evolve into strategic talent partnerships with alignment, including:

  • Consulting support for workforce planning and capacity modeling.
  • Joint roadmapping to pivot workforces as business objectives shift.
  • Leveraging data and insights to refine strategies over time.

This level of collaboration maximizes human capital flexibility and agility.

7. Know How to Integrate Digital Tools With Your People, Processes, and Other Technology

Specialized IT infrastructure and intelligent algorithms enable partners to optimize many elements. Seek those providing:

  • Seamless applicant tracking system (ATS) and video interview integrations.
  • Predictive analytics for smarter, faster hiring decisions.
  • Automation to remove administrative burdens for hiring managers.

The goal is leveraging technology to augment yet simplify human workflows.

8. Understand the Importance of Communication and Transparency

Open and ongoing dialogue creates trust and transparency for success. Your partnership should pay particular attention to:

  • Regular program reviews assessing scope, service levels, and objectives.
  • Quick escalation pathways for any issues arising.
  • User-friendly communication tools and meeting rhythms.

This facilitates early intervention for any problems before material impacts arise.

9. Know Which Performance Metrics Matter and How to Improve Effectiveness

Relevant metrics provide visibility into what’s working well and opportunities, such as:

  • Quality of hire showing retention rates and manager satisfaction.
  • Cost savings delivered compared to other hiring channels.
  • Recruiting cycle times indicating efficiency.

These insights better inform strategies to refine programs over time.

10. Look for a Past History of Success and Relevant Case Studies

Validating a provider’s experience ensures they can deliver for your organization, too:

  • Ask for case studies showing quantifiable metrics achieved.
  • Speak to references attesting to a strong track record.
  • Assess their tenure and client base as an indicator of expertise.

This due diligence reduces execution risk, so you choose a partner primed for excellence tailored exactly to your managed staffing needs.

Position Your Organization for Success With Managed Staffing Services from Velocity Procurement

Velocity Procurement has over 15 years of experience collaborating with clients to provide customized staffing and contingent workforce solutions that align top talent to your business needs. Leveraging industry-leading expertise, innovative technology, and data analytics, our talent advisors gain a deep understanding of your organizational culture and hiring priorities.

Contact us today to explore how our consultative approach to staffing and workforce planning can benefit your organization.

Uncovering Hidden Procurement Savings

By understanding procurement savings and how to identify them in your organization, you can significantly bolster financial performance. This blog explores some of the essential strategies for finding savings, how to calculate them, and how you can align your procurement and finance teams for maximum results.

Understanding Procurement Savings and Why They’re Essential for Your Business

In the most basic sense, procurement savings refer to lowering the cost of purchased goods and services. However, responsible procurement teams are strategic in their approach and focus just as much on cost avoidance and value maximization.

Realized procurement savings come from negotiating better deals, improving purchasing efficiency, streamlining processes, reducing waste, controlling maverick spend, and centralizing expenses. Ultimately, every dollar saved through procurement efforts flows straight to your bottom line.

While outright cost-cutting tends to provide only short-term savings, leveraging strategic sourcing and effective spend management can unlock recurring year-over-year savings and value. This may include both direct cost savings as well as longer-term indirect savings from improving cash flow, reducing risks, and forming strategic supplier relationships.

Procurement Savings vs. Cost Cutting

Cost cutting refers to abrupt, reactionary spending reductions like layoffs, budget cuts, foregoing maintenance, penalties from late payments, and stopping investments in growth. While sometimes necessary as a short-term fix, cost cutting often backfires long-term when it eats into future revenue and profits.

On the other hand, procurement savings stem from process improvements, responsible negotiating, waste reduction, and finding opportunities to add value. The goal is to lower costs in a strategic, sustainable manner without reducing quality or increasing risks.

Differentiating Between Visible and Hidden Procurement Savings

Procurement savings generally fall into two categories – visible (or hard) savings and hidden (or soft) savings. Visible savings are tangible reductions directly reflected in the bottom line, like lower per-unit costs.

Hidden savings are less obvious but still improve the bottom line indirectly, like reducing risks, improving cash flow, forming strategic supplier relationships, and avoiding future costs. Tracking both types of savings is key for calculating total procurement cost reductions.

For example, negotiating 60- instead of 30-day payment terms doesn’t directly reduce costs but accelerates cash flow, improves supplier relations, and avoids late fees. Hidden savings like this are easily overlooked without a rigorous procurement savings tracking process.

8 Strategies to Finding Hidden Procurement Savings

1. Negotiate Better Payment Terms and Enhance Supplier Relationships

By building strong relationships with suppliers through improved communication and collaboration, buyers can negotiate extended payment terms that enhance cash flow while deepening trust on both sides. Maintaining open channels enables further cost optimization over time. Strategic partnerships lead to favorable pricing and preference during negotiations. While regularly evaluating payment terms, a holistic procurement strategy recognizes that loyal buyers who support suppliers with early payments or temporary discounts in tough times reap significant hidden savings through strengthened interdependence and mutually beneficial supplier relationships.

2. Bundle Your Spend

Consolidating a company’s spend under fewer larger contracts lets suppliers offer better rates thanks to economies of scale. This bundling leads to volume discounts and lower per-unit costs.

For example, a company might purchase all its office supplies under one contract vs. having multiple vendors and contracts. Suppliers are willing to drastically lower rates to win all of that bundled business in one swoop.

Regularly analyze total category spend and identify opportunities to negotiate master service agreements. The savings can be massive with minimal effort.

3. Regularly Evaluate Your Suppliers

It’s easy for long-term contracts to become outdated as supplier rates increase, new players enter the market, and your needs change. Set reminders to regularly reassess suppliers even before contracts expire.

Run competitive bidding processes and negotiate new contracts for the same goods/services. Changing market conditions and new suppliers might allow substantial rate reductions for the same items.

Don’t get complacent. Aim to lower costs by at least 3-5% annually through renegotiation alone. Just because you’ve always used a supplier doesn’t mean you still should.

4. Consolidate and Centralize Data

With procurement data siloed across teams and facilities, it’s impossible to get a clear picture of total spending. Centralizing this data is step one for maximizing procurement savings.

Implement a unified e-procurement system accessible to all. This spend visibility makes it possible to identify redundancies, monitor budget vs. actuals, and guide better buying decisions.

It also provides leverage with existing suppliers when negotiating new rates. Data illuminates exactly what is being overpaid for. Consolidation enables significant yet hidden cost savings.

5. Implement Cost Analysis and Spend Analysis

Understanding where money is being spent is equally as important as how much. Cost and spend analysis provides this granular visibility, unlocking major savings opportunities.

Analyze expenses across each spend category – where is the most money going? Then, drill down by facility, department, item type, supplier, etc. This highlights redundancies, waste, and chances to consolidate spend.

Making data-driven decisions allows strategically reducing the highest spend categories first for maximum impact. You can’t reduce what you don’t understand or track.

6. Reduce Maverick Spend

Maverick spend refers to off-contract, unauthorized spending outside of procurement’s visibility. This results in paying higher rates vs using pre-negotiated contracts.

Implement purchase order requirements and approval workflows. This spending compliance ensures employees utilize preferred suppliers with lower contracted rates.

Savings leak out through maverick spend. Stopping it often reveals significant hidden savings. Procurement’s job is to guide informed buying, not restrict necessary expenses.

7. Reduce Waste and Supply Risks

Avoiding waste provides indirect savings by reducing the need for certain purchases altogether. Steps like monitoring product expiration, managing inventory, and streamlining assortment all lower procurement costs.

Reducing supply chain risk also unlocks major savings by preventing stockouts, production stoppages, and costly last-minute purchases from secondary suppliers.

Procurement should analyze product usage data and forecast demand for the right-size inventory. Cutting unnecessary supplies and allowing flexibility in sourcing generates substantial savings.

8. Acquire and Apply Procurement Technology

The right procurement software unlocks massive hidden savings by centralizing data, automating workflows, reducing maverick spend, and enabling advanced analytics.

Cloud-based e-procurement platforms provide real-time visibility into all spending and suppliers. This enables centralized e-sourcing, contract management, and guided buying.

Technology provides actionable insights to optimize costs, cash flow, risks, and compliance. The ROI is exponential yet overlooked savings compared to manual procurement processes.

 

Looking for more ways to reduce costs and find procurement savings? Explore our blog for eight more tips on unlocking hidden savings before the year ends.

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How to Calculate Procurement Savings

Calculating procurement savings accurately is crucial for demonstrating the value that procurement brings to an organization. However, it can be challenging to calculate savings in a consistent, standardized way across different spend categories and suppliers.

  • Here are some tips for calculating procurement savings:
  • Track savings at the most granular level possible – by SKU, service, or contract line item. This allows for more precise savings calculations compared to tracking at a category or supplier level.
  • Use a savings calculation methodology that separates one-time vs recurring savings. One-time savings from an ad-hoc price reduction should not be extrapolated over time.
  • Factor in the total cost of ownership, not just purchase price. Include all costs like freight, duty, installation, training, maintenance, etc.
  • Calculate savings over the full term of the agreement to account for price escalations or reductions built into contract terms.
  • Track both hard dollar and soft dollar savings. Hard savings are actual reductions in spend, while soft savings are cost avoidances from optimizing processes.
  • Use baselines tied to facts like previous contract rates or should-cost models to substantiate savings claims.
  • Leverage procurement software and reporting tools to consistently track savings across spend areas, suppliers, contracts, product families, etc.

Bridging the Gap Between Finance and Procurement Departments

While procurement and finance functions may seem closely aligned, there can often be disconnects between the two teams that undermine collaboration and savings tracking.

Here are some tips for improving alignment between procurement and finance so that you can continually improve your bottom line:

  • Establish standardized savings methodologies and reporting tools used by both groups to enable consistency.
  • Schedule regular meetings between procurement and finance leaders to discuss spend analyses, forecasts, targets, and performance.
  • Develop integrated tech platforms and dashboards that provide cross-functional visibility on spend and savings data.
  • Involve procurement early in budgeting and planning processes to align on goals and timelines.
  • Create joint incentive programs that reward both groups for hitting shared savings targets.
  • Conduct training for both teams on processes and systems to improve understanding of each other’s roles.
  • Identify pilot projects such as an e-invoicing rollout to demonstrate the power of collaborative efforts.
  • Foster informal gatherings and networking opportunities to strengthen interdepartmental relationships.

Piece Together the Procurement Savings Puzzle With Velocity Procurement

As you navigate the intricate landscape of procurement savings, Velocity Procurement stands ready to be your strategic partner in looking for hidden opportunities for financial enhancement. By leveraging our expertise, advanced procurement technology, and proven methodologies, you can streamline processes, negotiate better deals, and realize both visible and hidden savings.

Don’t navigate the procurement journey alone—partner with Velocity Procurement for unparalleled support, collaborative solutions, and a roadmap to sustained financial success. Contact us today, and let’s embark on a journey to optimize your procurement processes and maximize your bottom line.

Simplify Your Procurement Strategies in Supply Chain Management

Procurement is a critical component of any effective supply chain management approach. It can significantly impact a company’s success, determining its ability to secure high-quality goods and services, maintain competitive prices, and enhance relationships with suppliers. A well-managed procurement process can streamline operations, save costs, and drive business growth. In this blog, we’ll explore how Velocity Procurement, a leader in procurement solutions, can simplify your procurement strategies and propel your business to greater heights.

The Relationship Between Procurement Efficiency and Business Success

An effective procurement strategy is a critical element of supply chain management that can unlock new opportunities for business success. By securing competitive pricing and high-quality suppliers, an optimized purchasing process enhances cost control, quality, and operational efficiency. Data-driven procurement using predictive analytics enables proactive, just-in-time purchasing at optimal prices. Adapting to evolving markets through flexible contracting and dynamic discounting establishes resilience. Ultimately, a strategic approach to procurement facilitates resilient supply chains, sustained profitability, and the ability to gain a competitive edge in today’s dynamic business landscape.

Elevate Your Procurement Game With Scalable, Custom Solutions from Velocity

To help you achieve your procurement goals, Velocity offers scalable, custom solutions to navigate through complex procurement processes.

Expert Advisory Services for Navigating Procurement Challenges

With the evolving business environment, companies require expert guidance to implement comprehensive procurement strategies. Velocity’s advisory services provide insights into strategic sourcing by identifying optimal suppliers and pricing models. They offer global sourcing expertise to integrate international suppliers. Furthermore, they provide supply chain finance advisory to optimize cash flow and working capital through procurement strategies.

Digital Transformation That Gives You the Technology You Need

Technology is revolutionizing procurement strategies, making them more streamlined and efficient. From automated spend analysis to dynamic discounting, tools for improved spend visibility are becoming indispensable. Velocity’s technologies offer a blend of artificial intelligence, machine learning, and predictive analytics, transforming manual procurement processes into automated, optimized workflows.

Spend Management Solutions That Drive Informed Decision-Making

Sound spend management strategies enable better cash flow management and procurement effectiveness. With Velocity’s spend management tools, you can gain insight that helps you formulate effective procurement policy by revealing spending patterns. Velocity also helps you improve accounts payable processes by automating approvals and workflows and enhancing category management by providing granular visibility into spending.

Specialized Managed Services

Velocity provides a diverse suite of tailored managed services, including staffing, sourcing, supplier management, contract management, buying, accounts payable, and technology services to cater to the unique needs of each organization. For example, for a client lacking procurement expertise, Velocity provides experienced contract managers with the ability to negotiate agreements. For a client with limited supplier visibility, Velocity establishes a supplier management program, including performance monitoring.

By combining supplier relationship management with innovative methods like reverse factoring and early payment discounts, Velocity helps businesses manage working capital efficiently. Furthermore, the emphasis on enhancing supply chain finance and supplier relationships through trade finance ensures businesses can meet broader objectives efficiently.

Looking for custom, scalable procurement support solutions that transform your day-to-day operations? Contact the Velocity team today, and let’s talk about your procurement needs.

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5 Actionable Ways You Can Simplify Your Procurement Strategy in Supply Chain Management With Velocity

Despite the vast complexities of the procurement process in supply chain management, an increasing number of businesses are seeking simplified, effective procurement strategies. By optimizing the purchasing process and implementing a winning procurement strategy, you can streamline operations, reduce total cost, and enhance profitability.

Assess and Understand Your Current Procurement Processes

Before you embark on the journey to redesign your procurement strategies, an essential first step is understanding your existing procurement process. Spend some time conducting a thorough spend analysis of your business. This critical inventory management task includes activities such as quantifying the total working capital expended on goods and services, identifying key suppliers, analyzing spending trends, and mapping approval workflows. Predictive analytics aids this process by revealing inefficiencies and bottlenecks.

Set Clear and Attainable Procurement Goals

In line with your broader objectives, it’s crucial to set clear, attainable goals for your procurement strategy. These could range from improving supplier relationships to enhancing the working capital ratio or automating the accounts payable process to reduce operational costs. For example, a goal to reduce maverick spending would influence a strategy focused on improving spend visibility. On the other hand, a goal to improve cash flow would lead to strategies aimed at optimizing payment terms.

Identify Challenges and Pain Points

To progress, we have to acknowledge existing hurdles and rectify them. Look within your procurement strategy and supply chain management practices to identify what’s holding you back. Perhaps your purchasing process is too prolonged, leading to missed discounts. Or, you’re lacking the technology for automated spend analysis, resulting in limited visibility. The first step is recognizing the specific challenges.

Implement the Right Procurement Software

Utilizing the right procurement software is pivotal for a streamlined procurement strategy. Such technology can automate the purchasing process, making it more efficient while reducing the risk management concerns associated with manual methods. Digital platforms reduce cycle times by automating approval workflows. They minimize maverick spending by centralizing purchasing.

Train Your Team

Even the best procurement software and strategy can fall short without a competent team to operate them. Therefore, make sure your team is well-versed with the changes in supplier management, spend analysis systems, and new procurement strategies. Invest in training programs covering the updated processes, technologies, and compliance matters. This ensures they can adeptly handle the systems to meet your procurement goals.

Join Forces With Velocity Procurement Today

With these actionable insights and robust procurement strategies, your business’s supply chain management can take a scalable leap toward operational efficiency and profitability. Partner with Velocity today to simplify the procurement process and drive your business to greater heights. Velocity can provide guidance on strategic sourcing to optimize your supplier network and on total cost management to enhance working capital efficiency.

With over 20 years of experience managing complex global supply chains, we guide you through risk management, strategic sourcing, global sourcing, and category management. Don’t let the intricacies of supply markets hinder your growth. Equip your business with a winning procurement strategy and simplify your procurement process with Velocity today by contacting our expert team.

Understanding Direct and Indirect Spend and Why It Matters

In sound business operations, understanding how, where, and why money is being spent is vital. This knowledge forms the basis for strategic decision-making, influences cost control, and affects overall business performance. This article explores the concepts of direct and indirect spend, their impact on business, the difference between them, and more. Let’s delve deeper into the essence of spend and its key components in business operations.

What Is Spend? And What Role Does It Play in Business Operations?

Spend refers to the money a business allocates to procure goods and services necessary for operations, including both operating and capital expenditures. Managing spend plays a central role in business operations, encompassing costs for raw materials, inventory, supplies, equipment, utilities, services, salaries, facilities, and overhead. Monitoring and optimizing spend enables organizations to control costs, maximize value, forecast budgets, identify savings opportunities, and negotiate better supplier contracts. Overall, understanding spend patterns and taking steps to optimize expenditures allows businesses to operate more efficiently and gain a competitive advantage.

The Impact of Spend Management on Cost Control

Spend management is the process of tracking, analyzing, and controlling operational expenditures. It provides visibility into where money is being allocated and helps identify opportunities to reduce costs.

Effective spend management and analysis allow businesses to consolidate suppliers and leverage higher volumes to negotiate discounted pricing. This leads to lower procurement costs overall. Analyzing expenditures can help eliminate maverick spending outside of preferred suppliers. Enhanced budget accuracy and reduced invoice discrepancies also lower procurement costs and improve margins.

Ongoing spend analysis enables continuous monitoring and helps ensure cost reduction targets are met. It also supports data-driven decision-making regarding make vs. buy choices, inventory levels, contract terms, and other factors that impact the bottom line.

Role of Spend Analysis in Strategic Decision-Making

Spend analysis involves collecting, cleansing, classifying, and analyzing expenditure data. It provides actionable insights to inform strategic decisions and improve financial performance.
Analyzing spend data allows businesses to identify the largest areas of expenditure, detect inefficient purchasing practices, consolidate suppliers, negotiate from a stronger position, and make informed sourcing choices.

The insights gained support strategies around supplier relationship management, inventory optimization, budget planning, and cost reduction. They also aid long-term decision-making regarding supply chain design, make vs. buy trade-offs, geographic expansion, and launching new product lines or services.

What Is Direct Spend?

Direct spend refers to purchases of goods or services directly tied to producing a company’s products or services. It includes raw materials, components, packaging, equipment, inventory, and other items that go directly into a final product.

Direct spend is managed by procurement teams who focus on sourcing, procuring, and optimizing the costs of items that directly impact core business activities. The management of direct spend has a tangible effect on profit margins and the bottom line.

Examples of Direct Spend in a Business

Here are some common examples of direct spend:

  • Raw materials like wood for furniture, steel for auto parts, cotton for apparel, chemicals for pharmaceuticals, grains and hops for beer, cocoa for chocolate, etc.
  • Ingredient components that go into food and beverage products
  • Electronic parts purchased to manufacture computers, phones, or other devices
  • Packaging materials like bottles, cans, boxes, bags, labels, and wrapping
  • Machinery, equipment, and tools used in production and assembly
  • Inventory and other direct materials consumed in manufacturing

How Does Direct Spend Influence Business Activities?

Direct spend has a significant influence on business activities in the following ways:

  • It impacts the cost and availability of materials for production. This affects output levels, lead times, and the ability to meet customer demand.
  • It determines profit margins on finished products. Lower direct spend translates to higher per-unit profits.
  • It influences decisions regarding make vs. buy, plant locations, sourcing strategies, and supplier relationships.
  • Managing direct spend facilitates volume discount negotiations and helps ensure stable supply channels.
  • Analysis of direct spend data aids forecasting, budgeting, and targeted cost reduction efforts.

What Is Indirect Spend?

Indirect spend refers to operating expenses not directly tied to producing a product or service. It sustains overall business operations rather than core processes. This includes facilities, utilities, IT, travel, marketing, HR, consulting, and more.

Indirect spend is managed by several departments across an organization. It can be more complex to control but also offers opportunities to significantly reduce overhead costs.

Examples of Indirect Spend in a Business

Typical examples of indirect spend include:

  • Office supplies like paper, pens, computers, and furniture
  • Facility costs, including rent, utilities, maintenance, and cleaning
  • Business services such as marketing, accounting, IT, consulting, legal, and employee training
  • Insurance, subscriptions, dues, fees, and logistics expenses
  • Software, internet, phone, and other technology services
  • Fleet, distribution, and additional logistics expenses

Effective spend management can significantly impact your procurement operations. Learn more about how Velocity’s experts can support your spend management strategy.

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The Impact of Indirect Spend on Business Operations

While not directly tied to end products, indirect spend impacts business operations in the following key ways:

  • It represents a significant portion of operating costs for many companies.
  • Reducing indirect spend has a direct impact on profitability.
  • Inefficient indirect spend can result in financial waste and lost cost savings.
  • Managing indirect spend involves cross-departmental coordination to optimize overhead.
  • Analyzing indirect spend helps identify savings in operating expenses and non-core services.
  • Controlling indirect spend improves budgets, cost allocation, and overall efficiency.

Direct vs. Indirect Procurement Spend: The Similarities and Differences

Direct and indirect spend are the two primary forms of business procurement. While they have some overlap, there are also key differences between the two categories. Both involve purchasing goods and services needed to run business operations. However, direct spend refers to purchases directly tied to making the products or services a company sells. Indirect spend covers overhead costs needed to support operations.

Some similarities between direct and indirect spend include:

  • Both involve purchasing goods and services from external suppliers
  • Require developing relationships with key suppliers
  • Involve procurement, negotiation, contract management, and other buying processes

Key differences include:

  • Direct spend is directly tied to making the final product or delivering core services. Indirect spend covers overhead costs.
  • Direct spend has a more obvious impact on bottom-line profit margins. The impact of indirect spending is less visible.
  • Direct spend procurement focuses on a limited number of strategic suppliers. Indirect has a larger supplier base.

Streamline Your Spend Management With Velocity Procurement

Managing direct and indirect spend across complex supply chains presents many challenges for companies today. Disjointed processes and data make gaining comprehensive visibility and control difficult, and this fragmentation leads to inefficiencies and lost savings opportunities.
Avoid these challenges and more with a dependable procurement partner like Velocity.

Reach out to our team today, and let’s streamline your spend management strategy.

Procurement Strategy vs. Value Chain: A Comparative Analysis

Forging a path in today’s competitive business environment demands an apt understanding of key concepts like procurement strategies and the value chain. These strategies may sometimes blur their lines due to their interconnected roles, but bear vital distinctions that impact your business’s efficiency and profitability. In this blog, we’ll dissect these business components, defining their roles, unique attributes, and the interplay between them.

Understanding the Core Concepts

The Role of Your Procurement Strategy

A procurement strategy is a long-term plan designed by your procurement team to manage procurement activities in line with your company’s overall objectives. It serves as the guiding principle for the purchasing process, directing the selection, engagement, and management of suppliers.

A well-executed procurement strategy improves procurement performance, stakeholder cooperation, and supplier satisfaction. The diverse layers of the procurement process, from global sourcing to vendor management, make it an elemental aspect that drives an effective supply chain.

Understanding the Value Chain

The value chain is a model that illustrates the activities your business uses to deliver a valuable product or service to its customers. From raw materials sourcing, production, marketing, distribution, and customer service, the value chain identifies areas where a business can optimize efficiency and create customer value.

At its core, the value chain model helps assess and devise strategies to enhance supply chain finance and working capital ratio. The model also encourages companies to identify and harness strategic sourcing opportunities and assess how these decisions influence the procurement chain.

Differentiating Procurement Strategy From Value Chain

Key Attributes of a Procurement Strategy

A procurement strategy is majorly determined by your company’s procurement practice, approach, and policy. It typically includes practices like spend analysis of purchase orders, predictive analytics for effective decision-making, and risk management for strategic procurement.

Companies employing effective procurement strategies often leverage digital procurement to automate order management, payment gateways, and inventory management. The application of procurement management KPIs is another element that helps measure procurement performance.

Dedicated tools for procurement enhance supplier relationships, simplifying the process of vendor development and strengthening supplier information management. This results in a winning procurement strategy that drives business growth.

Essential Characteristics of Value Chain

The value chain consists of input logistics, operations, output logistics, marketing and sales, and after-sales service. Additionally, it involves business support activities like techno-structure, procurement, human resources, and research and development.

One of the compelling features of the value chain is its stand on enhancing supplier relationships. It directly results in innovative collaborations, early payment discounts, and effective supply chain management.

The value chain is known for shaping a company’s working capital management, ultimately influencing the total cost of managing business operations. By understanding the importance of a value chain and reinforcing its principles, your business can decidedly improve its overall efficiency.

Want to ensure your procurement strategy is aligned with your business goals? Velocity’s procurement assessments can help.

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Exploring the Interplay Between Procurement Strategy and Value Chain

How Procurement Strategy Influences Value Chain

A comprehensive procurement strategy is pivotal in shaping an organization’s value chain. By determining the specifics of purchasing, it indirectly affects the cost and quality of inputs, integrated operations, budgeting, and customer service.

Strategic procurement can lead to robust supplier selection protocols, which ensure high-quality inputs for operations. As a crucial part of the total quality management approach, procurement strategies could also significantly improve operations, positively reflecting on output logistics and after-sales services.

Moreover, when a company incorporates major decision-making aspects like spend analytics, predictive analytics, and automated spend analysis into its procurement strategy, it invariably leads to a lean, efficient, and profitable value chain.

The Role of Value Chain in Shaping Procurement Strategy

On the contrary, your organization’s procurement strategy could be influenced by the effective application of the value chain. For instance, operations within the value chain—from global sourcing, demand forecasting, design, production, to sale—provide insights into the types, quantity, timeline, and cost of inputs needed which the procurement strategy needs to accommodate.

By using the value chain as a guide, you can align your procurement strategy to business objectives, leading to improved outcomes. A structured value chain provides abundant opportunities to improve cost-effectiveness, streamline workflows, augment sustainability, and deliver value to the customer.

Optimizing Procurement Strategy and Value Chain for Business Success

Optimal procurement strategies and effective value chain management are fundamental to any business’s success. Here are some key considerations for streamlining these processes.

Steps to Develop an Effective Procurement Strategy

  • Define clear procurement activities aligned with organizational strategy and needs
  • Outline the purchasing process, including guidelines, purchase orders, supplier selection, execution, and contract management
  • Implement predictive analytics tools to forecast needs, manage inventory, and provide spend visibility
  • Integrate automated spend analysis into the procurement process

Techniques for Realizing Full Value Chain Potential

  • Collaborate closely with suppliers to ensure consistent access to quality materials and reduce costs
  • Build strong supplier relationships grounded in trust and shared values to secure favorable long-term payment terms
  • Make environmentally responsible sourcing choices to enhance corporate reputation
  • Carefully coordinate from raw materials to final sale to increase efficiency
  • Pay close attention to each link in the chain, from supplier agreements to customer service, to optimize value creation

Optimize Your Procurement Strategy and Value Chain Potential With Velocity Procurement

Velocity Procurement offers a suite of solutions that encapsulates every aspect of an efficient procurement strategy—from vendor management to strategic sourcing. Our goal is to help businesses create a more robust and efficient procurement chain, maximizing the value derived from supplier relationships and enhancing overall procurement performance.

Reach out to our team today to start your procurement journey.

The Future of Spend Analytics

The evolving nature of data and its management presents new challenges and opportunities for businesses worldwide. This blog focuses on the future advancements of spend analytics, key trends shaping its landscape, and the advantages of effective spend management. Let’s dive in.

Current Approaches in Spend Analytics

Spend analytics refers to the processes and tools used to collect, clean, enrich, analyze, and report on procurement spend data. Current approaches typically involve gathering transactional data from enterprise resource planning (ERP) systems, supplier databases, and other sources. This data is consolidated into a single repository to provide visibility into spend across the organization.

Once the data is integrated, descriptive analytics provide insights through spend classification, mapping spend to categories, and identifying top suppliers and high-spend areas. Spend cube analysis looks at spend by multiple dimensions like category, business unit, geography, and supplier to identify trends and outliers.

Data visualizations like bar charts, pie charts, and heat maps enable intuitive analysis of spend patterns. Dashboards allow procurement teams to monitor KPIs like maverick spend, savings delivered, and contract compliance. This enables them to track performance versus goals.

While current approaches focus heavily on retrospective analysis of historical spend, leading organizations are supplementing this with predictive analytics to model future spending and prescriptive analytics to recommend optimized actions.

Key Trends Shaping the Future of Spend Analytics

Several key trends are impacting the evolution of spend analytics capabilities:

Advanced Machine Learning and Artificial Intelligence Techniques

Applying machine learning to enrich spend data and uncover patterns is becoming more mainstream. Neural networks can classify complex spend data while natural language processing extracts insights from unstructured data like contracts and communications.

AI techniques like intelligent process automation can automate repetitive tasks like invoice processing and supplier master data management to improve efficiency.

Predictive and Prescriptive Analytics

Predictive analytics will forecast expected spend based on historical patterns, projected business needs, and external signals. This enables more proactive planning and decision-making.

Prescriptive analytics goes a step further by recommending optimal procurement strategies based on financial impact, risks, and constraints. This shifts spend analytics from hindsight to foresight.

The Rise of Real-Time Spend Analytics

Traditionally, insights were obtained from periodic analysis of historical spend data. Real-time analytics will enable continuous monitoring as new data is generated, supporting rapid decision-making.

Technologies like embedded analytics, streaming analytics, and automation will facilitate this shift from periodic to perpetual insights.

Consolidation of Data Sources

Rather than relying solely on ERP data, leading organizations are aggregating and reconciling external data from suppliers, customers, contracts, market indexes, and other sources. This provides a more complete view of internal and external factors impacting spend.

Strategic partnerships with suppliers will also facilitate the sharing of planning and operational data via supplier portals and networks.

Managing Tail Spend

While most spend analytics focuses on tier-1 suppliers, the long tail of low-spend suppliers often represents significant savings potential. New tail spend analytics approaches help optimize this area.

Automating purchase order approval, implementing purchasing cards, and consolidating suppliers help streamline tail spend management.

Want to navigate the future of spend analytics with confidence? Explore Velocity’s spend management solutions and rethink the way you manage your sourcing, procurement, and more.

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The Advantages of Effective Spend Management

Effective spend management gives organizations greater visibility and control over their procurement spending. By consolidating and analyzing spend data, companies can identify opportunities for significant cost savings and process improvements. There are several key advantages to implementing an effective spend management program:

Cost Savings and Optimization

One of the biggest benefits of spend management is identifying opportunities to reduce costs. With detailed spend analytics, companies can pinpoint areas of overspending, negotiate better contracts with suppliers, eliminate maverick spending, and consolidate their supplier base. By optimizing procurement processes, strengthening supplier relationships, and leveraging economies of scale, organizations can achieve substantial hard dollar savings across all spending categories.

Improved Supplier Relationships

Spend analytics provides the insights needed to assess supplier performance, identify best-in-class partners, and develop strategic relationships. By gaining visibility into factors like pricing trends, service levels, and total cost of ownership, procurement teams can determine which suppliers deliver the most value. They can then consolidate spending with preferred suppliers to maximize leverage, negotiate improved terms, and work collaboratively on process improvements. Strong supplier relationships contribute to a high-performing supply chain.

Risk Mitigation

Spend management strengthens supply chain resilience by identifying vulnerabilities and dependencies. Analytics can detect high-risk suppliers, categories prone to volatility, and potential continuity issues. Procurement organizations can then develop robust mitigation strategies such as expanding the supplier base, increasing stock levels of critical materials, and implementing dual sourcing. By proactively managing risks, companies avoid supply disruptions that lead to lost revenue and production downtime.

Data-Driven Decision Making

With comprehensive data-driven insights, procurement teams can shift from gut feel decision-making to an evidence-based approach. Spend analytics provides the metrics needed to inform strategic choices on make vs. buy decisions, regional vs. global sourcing models, insourcing vs. outsourcing, and supplier selection. Fact-based decisions lead to better procurement outcomes and alignment with overall corporate strategy.

Improved Strategic Sourcing

Detailed visibility into spend enables organizations to develop sourcing strategies that align with organizational goals, category requirements, and market dynamics. Analytics uncovers trends, opportunities, and risks to inform approaches for cost reduction, supply assurance, innovation, sustainability, and more. With data-driven sourcing, procurement can transition from tactical purchasing to strategic value creation.

Why You Need a Spend Analytics Expert: Choose Velocity Procurement for Your Spend Management Needs

With years of experience across billions in procurement spend, the analysts at Velocity Procurement have unmatched expertise across all categories and geographies. Our cloud-based analytics platform and suite of advisory services provide complete visibility into your data, powerful insights, and strategic roadmaps that transform your procurement functions. We tailor our approach to your unique needs and goals, equipping your procurement team with the tools and knowledge for success and enabling you to fully leverage spend data.

To learn more about Velocity Procurement’s analytics and advisory services, contact our experts today. Better spend management starts here.