Tips for setting up a Preferred Supplier List (PSL)

Tips for setting up a Preferred Supplier List (PSL) with a Managed Service Provider.

Potential MAT customers often ask, what does a good PSL look like for managing supply, so I thought I would share my answer.

1) How Many Suppliers?

Quite often MATs are using a number of different temporary supply agencies. The optimum number for a MAT to have will often depend upon a number of factors including; geography, skills required and the number of different locations the MAT operates in. As a starting point, it is advisable to have at least 3 agencies for each location who can provide the required skills in each of your locations. Working in this way ensures that you will have access to the required skills and keeps the competitive nature of having more than one supplier.

2) Capability to Supply the Right Workers in the Right Locations

Geographic capability and ability to supply the right skills should be assessed as part of a due diligence process to ensure that your PSL has the capability across all current and potential projects.

This can be done by putting out a Request for Information (RFI) to your supply agencies and asking them to respond by highlighting the areas that they work in.

To verify this information, it is also worth surveying your academy hiring managers to ask them what sort of service they have received from these agencies in the past and whether their responses reflect this.

3) Centralising the Process

Centralising the management and engagement of temporary supply cover will not only ensure a standardised process is achieved, but will also stop new agency suppliers from being engaged on their own terms, minimising compliance risk and the risk of increased margins being charged.

It is possible to achieve consistency without centralised ordering but not unless you also have a technology solution (see point 9) in place for each academy location.

4) Key Performance Indicators (KPI’s) and Service Agreements

There should be an overarching Service Agreement that all supply agencies will be required to sign. The Service Agreement will define minimum requirements from the agency in terms of insurances, but will also define processes that they will go through when they supply candidates, for instance, every candidate should be met face-to-face and should be interviewed. Each location may have different requirements in terms of compliance items and they should be added as an addendum to the service agreement as required.

A standard suite of job specifications should be drawn up for each requirement.

Key Performance Indicators (KPI’s) will measure the response time from each agency, for instance, how quickly did they provide candidate details, did they arrive on time, were they of a suitable standard?

5) Compliance Items

There are a number of statutory requirements that need to be ensured for every agency worker, for instance, Right to Work in the UK, there is also a requirement to track tenure to ensure compliance with the Agency Workers Regulations (AWR).

Compliance items will be covered in the service agreement with the agency suppliers, however, it is important to ensure that these are adhered to, so it is recommended that agencies are audited at least twice a year. Our own evidence suggests that even though many supply agencies may hold the Quality Mark with APSCo, REC or SiR 61% of supply agencies fail their first audit and 25% fail on legal compliance items (source The Supply Register).

 6) Standardised Payment Terms

Agency payment terms can vary wildly and should be standardised in with your requirements. Remember that supply agencies pay their workers long before they receive payment from you so payment terms should be fair and reasonable.

7) Standardised Margins

Margins should be examined and it is recommended to standardise margins across all suppliers so that there is a level playing field. Margins will vary depending on the category of worker supplied, i.e. Teacher may be supplied at higher margins than Support Workers due to scarcity. Consider working to a fixed pounds/pence per day figure rather than % mark-up as our own evidence suggests that % mark-up can also lead to excessive pay rates.

8) Standardised Pay Rates

Due to varying pay scales, pay rates can vary, even for the same job in the same location, when this is left for supply agencies to manage themselves, it could lead to excessive pay rates that are out of line with the market. Managing pay rates will lead to cost savings, but will also result in parity and fairness of pay for the supply staff doing the same job in the same academy location.

9) Technology and Reporting

Technology has an important part to play in the management of a successful PSL. Technology can provide on-line timesheet authorisation and real-time reporting. It will also ensure legal compliance items are tracked and provide consolidated invoicing. Technology solutions come into their own where the volume of requirements is high or very complex, and over a number of locations; but remember – technology in education recruitment should be used to underpin a consistent quality service – everyone knows how fraught 6:45 – 9:00 am can be!

If working with a Managed Service Provider (MSP) to deliver your PSL the technology should form part of the service, including its costs. Where supplying agencies are asked to foot the bill for the technology it’s not uncommon for margins to increase over time to the customer to cover these costs!

 10) Team and Ongoing Management            

Managing a PSL can be a full-time job and should not be left to manage itself. The performance of supply agency suppliers will vary over time and agencies should be removed and added as their performance rises and falls. A well-managed PSL with a partner should be fluid, not static; this ensures that agencies are continually on top of their game, as they are aware that they risk being removed for poor performance.

Depending on your volume of temporary supply agency worker requirements, a team of people may be required to manage agency suppliers, take in vacancies, audit agency suppliers, and drive continual improvements in the process.

Without dedicated management resource, any work that is done risks being eroded over time and the PSL may become ineffective.

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About the Author – Baljinder Kuller is the Founder and Managing Director of The Supply Register and has 16 years experience in Education Recruitment and Recruitment Process Outsourcing within the public and private sectors.


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