A leading foodservice organisation with £17m of addressable temporary labour spend had a lack of visibility on regional and local price differences & margins with a large number of uncontrolled suppliers. There was a fundamental requirement to challenge the current method of sourcing, whilst recognising the quality, skill and service requirements of the organisation.

How we responded to the challenge

• The first step was to understand the current pricing structure of each of the 50 regularly used incumbent suppliers. However, given the wide range of skill requirements, standardisation was also essential in returning control to our client.
• The unique step: We created 20 standard profiles and 5 geographical bands covering over 900 UK towns (corresponding to regional/local price variations for the same profile), and requested each supplier tocomplete a Request For Information covering standard pay rates, their margin and the number of hours per job profile they had supplied in the previous year.
• A Request for Proposal was compiled and issued to 55 potential suppliers, with a view to consolidating our requirements to as few top-tier suppliers as possible. Each supplier was requested to complete their capacityfor each town/postcode and then provide fully open-book pricing to include the pay rate, NI, holiday pay and margin.

Results

• Our client had far greater control through standardised job profiles and geographical bands to which every agency had to adhere.
• Following the analysis and negotiation phase, a core list of just 16 suppliers was implemented.
• The project delivered savings of over £900k, and reduced agency margins by an average of 28%.