Posting staff at client sites is becoming an increasingly attractive arrangement, with tangible benefits for suppliers and individuals – but employers shouldn’t overlook the risks
One year ago Peter Finlay, a senior cost manager at consultancy Turner & Townsend, was seconded to a procurement role at Northumbrian Water to support the utility giant’s water networks procurement project. Over the 12 months, Finlay was able to apply his procurement expertise plus experience from his civil engineering and quantity surveying background to make a real impact at Northumbrian Water and to the project itself. Working onsite also allowed Finlay to mentor the client’s staff.
Although the practice of embedding procurement and supply chain staff into client teams is not particularly common, it’s one that is certainly gaining traction. More organisations are taking the leap, largely due to the reported benefits to organisations and for the individuals themselves.
Richard Wilding, emeritus professor, former chair of supply chain strategy at Cranfield School of Management, believes this is a key value driver. “Innovation can be defined as taking ideas that are new and creating economic, social or environmental value. The use of secondments can enable new ideas to be shared thus creating value for both parties and innovation.”
Patrick Penfield, professor of supply chain practice at the Whitman School of Management at Syracuse University in the US, agrees, and says while the practice itself has been around for many years, it has recently seen a sharp upturn in popularity. But why now?
Put your people where your value is
Penfield points to Lockheed Martin as a good example of what can happen when a firm chooses secondments, as the US defence contractor often asks suppliers to be onsite to order and manage their inventory. “The onsite partners work at the Lockheed Martin facilities and serve as procurement representatives while helping to manage their inventory. By having the supplier’s employees onsite, it saves Lockheed Martin personnel costs and also allows Lockheed Martin buyers to focus on more complicated mechanical assemblies and subcontract efforts,” Penfield says.
“It’s really about how much you purchase from that particular supplier. Having a supplier representative onsite can also reduce a company’s headcount, or you can have your company’s employee work on other strategic initiatives to reduce costs. But if you don’t buy a lot of product or a lot of services, then you won’t see something like that. It’s all about volume,” he adds.
An obvious benefit of this arrangement is for suppliers to learn more about a customer, to understand their “wants and needs” more deeply, Penfield says. This enhances the relationship and could lead to identifying new opportunities. “You might see something that they’re purchasing from another supplier and say why would you buy from them when we supply that also. Or there might be an opportunity to share knowledge of what’s going on at that company with your company, to look for other opportunities of other things that you might be able to sell to them or be able to offer from an expertise standpoint.”
“It’s a big opportunity, it can go a long way to strengthening a relationship,” Penfield adds, but this level of commitment must deliver in terms of cost and personnel. “It has to be with a strong partner you buy a lot of volume from, that you’ve worked with for a long time.”
Secondments help share talent and skills
A key benefit of procurement secondments is access to vital skills, especially in restricted talent markets. Northumbrian Water head of procurement Philip Hicks says they draw in the talent needed to deal with peak workload or special projects without the expense of holding full-time employees.
Hicks says it enables organisations to secure and utilise skills which may not be attainable if that role had to be recruited permanently, and it provides access to individuals outside of normal client salary banding, headcount, budget limitations. There is also diversity of resource to consider – with secondees coming from a wide range of industries and more experienced secondees able to take part in mentoring and guidance of younger staff at clients’ sites, he adds.
“When you have seconded individuals, you can be quite specific with the skillset that you want. I can ask one of our large partnering organisations which has knowledge in this type of contract if they can look within quite a large pool and find someone more easily with the skillset we want. Whereas, if you went out into the market there’s a chance you might land someone who’s just right, but inherently what happens is you end up compromising on something,” Hicks says.
“You might really like their people skills, the way they show up for an interview, but actually, they might not have the experience, or they’ve got all the skills and experience you want but they haven’t quite got the people skills. If I’m making a permanent appointment then, really, I want all of those things to be absolutely perfect.
“With seconded individuals you don’t have to worry about succession planning and development plans and career ambitions for the next 10 years and how they’re going to fit in with the team. And then, of course, there’s the fact that it’s much more straightforward.”
Enlisting suppliers to find the right talent under flexible conditions is appealing, but it’s only possible when working with organisations which are already in-tune with your requirements and culture. “We want to be working with suppliers who inherently have similar values and core skills and understand the way to work in the market. They wouldn’t put an individual into my team who wasn’t aware of the importance of customer service,” Hicks adds.
What’s in it for procurement?
But this approach is not without risks, one being it can be difficult for secondees to “act as client” and feel empowered to make decisions. Client processes and procedure policy can be complex and unique, so a secondee has to quickly learn how to navigate the organisation’s methods to add value. Additionally, doing things the “client way” can mean a secondee ends up working in a mechanistic way rather than bringing their own knowledge and experience, he says. As such, it is really important for all involved to be committed to the embedding process from the outset.
For Rodney Apple, a specialist procurement and supply chain headhunter in the US, advantages for all parties include improved analytics due to better sharing of data, process improvement, stronger collaboration and innovation around research and development. However, there’s the bigger risk that comes from an organisation’s confidential information being shared with secondees.
Penfield advises: “You have to be careful about who you have onsite, especially if you have IP that is extremely important to your business. It’s always a concern, especially with cyber attacks so there definitely would have to be a security clearance given to onsite partners. There will be background checks and they would have to sign NDAs.”
Perhaps the most challenging risk to overcome is whether the employee will jump ship. Apple warns that successful secondments are known for this and suppliers can be tempted to poach staff. It’s an issue Penfield agrees on, saying: “The danger if you’re the supplier is that you might lose that person to that customer, especially if they do a great job, and they might say ‘We really like you and what you offer, come work for us permanently’. That’s something you have to be somewhat concerned about.”
Procurement professionals have a lot to gain from taking secondments: it brings the opportunity to work in detail with the client team and experience “client side”, to battle new working challenges, and to strengthen their CV through delivering specific projects as “the client”.
And while poaching is a concern and parties are wise to consider the impact to the relationship if this happens, it shouldn’t put organisations off. If anything, employers can improve their chance of retaining staff by reinforcing what they offer as career opportunities: to have flexibility, a change of environment, new experiences that also grow skills, all while enjoying job security. Now more than ever, buyer-supplier secondments could present a crucial way to expand the skills of procurement and enhance its position as a business asset.