Do You Track any Non-conventional Supplier Metrics? | DCR Workforce Blog

Do You Track any Non-conventional Supplier Metrics?

Many times, we go through life looking at things without seeing them! We rarely wonder about things like what goes into getting uninterrupted power supply (unless there is a blackout), water supply, clean roads and flights on time! The amount of hard work, co-ordination, commitment and operational processes that underlie the carton of milk we purchase are stuff we barely recognize, if at all.

It occurred to me that the interface between a supplier and the client in a contingent workforce management program often only focuses on the responsiveness to requisitions or quality of hires. But the relationship between the two extends far beyond these considerations.  When companies use the services of third parties to procure temporary talent, they do so with the expectation (or at least the desire) that the service does not come with added administrative burden.  Who tracks invoicing, issue resolution, user support, or supplier credentials? If you happen to do so, do you tie performance to service level agreements and establish metrics which track these non-conventional items on a regular basis? Or, do you conduct a post-facto audit, which occurs a long time after all the damage is done?

In the normal course of events, a supplier receives an order, fills the order, invoices the client and gets paid. But there could be many a slip between the cup and the lip, leading to a disorganized management of affairs, as when:

  • A requisition is taken by phone and the supplier scrambles to fill it – then the lack of a purchase order makes it almost impossible to get paid;
  • The invoice does not provide the necessary details to enable its validation and confirmation to enable payment authorization.
  • The worker’s labor costs are charged to inappropriate cost center and/or general ledger account or one that has been closed due to depleted funds. Ultimately, the check cannot be paid leading to disputes all around.

What causes these situations?

  • There is no system and no process.
  • There are systems and processes but internal personnel were never trained on the process for paying suppliers of temporary workers.
  • The processes are not automated, or are not designed to enable a purchase order to be tracked in every direction.
  • Payment terms are not set or followed.
  • Missing or inaccurate timecards or delays in time submission or approval result in delays in payments. This causes transaction costs to shoot up and puts a heavy strain on the supplier’s cash flows.
  • Payments may get duplicated due to the long delays and erroneous processes.
  • Processes for corrections are unclear, and there is no defined “look back” period for corrections.
  • Volume discounts and early-pay discounts cannot get claimed.
  • For a public company, such payment related issues could result in a lack of compliance with the Sarbanes Oxley Act, which could look at some of the payments not only as unauthorized, but also fraudulent.

As a wag said, change is the only permanent thing, and it makes sense to change the supplier metrics you track.  Your metrics must drive your business imperatives, providing you with insight into areas requiring attention and improvement. Let us discuss some best practices in managing Accounts Payable for contingent workers in our next post. Meanwhile, do write in with details of metrics tracked by you.


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.