In terms of contingent labor, Services Procurement is most often used in reference to the provision of more complicated services categories, which are usually executed under a discrete contract per engagement such as statement of work (SOW), management/project consulting, and outsourced services (e.g., call centers, IT support etc.).
Here at Beeline, we define Services Procurement as a process for buying and managing strategic outsourcing of work and consulting services through a SOW.
This may still leave you wondering, “How do these workers differ from the contingent staff I already manage?” The simple answer is that most of your contingent workers are engaged on an hourly basis via a staffing supplier while SOW-based projects employ workers who are typically paid a regular, consistent salary by their employer and continue to receive this salary when not working project assignments (i.e., benched resource). In SOW-based engagements, you typically pay their employer an agreed fee for completion of the project, not for the number of hours their employees worked on the project.
Think about it in terms of a real-life project: remodeling your bathroom. You may not have the skills to remodel your bathroom, so you decide to outsource this project. Where do you start? Typically, you interview several possible contractors, evaluate their qualifications, and go through a competitive bid process to make sure you are getting the best price with the best outcome you want. You ask each supplier to provide details to any questions you have in order to get the bathroom you have been dreaming of. Once you review all bids, you decide on the supplier you want to move forward.
At that point, you will put a formal document (SOW) in place with this supplier. The SOW should capture the scope, milestones/deliverables (e.g. tile walls, install new sinks, new light fixtures, etc.) and a timeline they have to follow based on the mutually agreed terms. If they don’t fulfill these terms, there may be penalties. You may get to discount a percentage of what you pay them if they don’t deliver the project on time, within scope, or budget. Since the chosen supplier is going to have several workers coming into your home, you will want to control who has access to your house. (This touches on the subject of security, but that will require another blog post.)
Services Procurement generally involves strategic outsourcing. But it can also be used to control non-strategic service workers and projects, including the lawn care companies that come every week to mow your lawn and trim your bushes. Their work isn’t a core element of your life, but it is a necessary, ongoing service that needs to be managed. It can be important because if something occurs while the service provider is on your premises, you will want to know which worker was onsite on the day and time the incident occurred.
Services Procurement management is one important module of Beeline Enterprise, our vendor management system (VMS) for enterprise companies globally. In fact, Staffing Industry Analysts VMS Landscape Differentiators 2023 report rated Beeline’s Services Procurement solution “Best Imaginable,” for its combination of capability, usability, and configurability.