To Agree Or Not To Agree.

By Glenn Bratton, Manager – IT Services, Frog Recruitment

Having just attended an HRINZ presentation by Jeff Hollows, National Procurement Manager, NZ BUS on the Future of the PSA; fresh thinking was encouraged around the true value of Preferred Supplier Agreements (PSA) for both the company and the supplier involved.

In short, the PSA environment is in a muddled state. Ambiguity, uncertainty, confusion, erosion of added value elements and a growing feeling of frustration by all parties is being felt.

My history of PSA’s started some years ago at a time when the organisation wanted to formalise a business relationship with a supplier that had been built on trust and successful performance. Certainly price was negotiated but in turn this was compensated by a guaranteed volume of work and recognition of being a valued and strategic member of the advisory capability for the company.

Today, as a result of the advancement of internal recruitment teams, compensation for providing best pricing has been lost as has the role of ‘trusted advisor’.

The challenge lies in conveying that, as opposed to being a threat. We can still add value to the instigators of the internal recruitment teams because there are those amongst the recruitment agency world who really do want to add value to the process.

My concern is simply that the commoditisation of the PSA process has eroded the value added elements once provided to organisations. Competitive advantage, market intelligence, innovative solutions, strategic know-how and industry smarts have been compromised as mediocrity creeps in.

This concern was echoed by Hollows in his presentation when he highlighted a crucial part of the PSA is whether the supplier meets the values of the organisation rather than seeing how low they can be reduced on price.

So, 6 points to consider pre-PSA for 2013 and beyond. Look for suppliers who;

  1. Reflect your values and ethics in the marketplace;
  2. Demonstrate experience and knowledge in their chosen field;
  3. Will provide value and adopt a partnership with you as opposed to just being a supplier;
  4. Add a new dimension when talking about your strategic plan;
  5. Fully articulate their expertise in a way that will provide added benefit to your organisation; and
  6. Lastly, value the above against price.

With both parties entering any agreement with gusto and commitment, a great business relationship will prevail.

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