Question

Karen Williams, the new director of supply management at Best Banks, was excited to be working at her new job. After gaining over 10 years of experience in various supply management positions at a first-tier automotive supplier, she was looking forward to being in a new industry.\

Best Banks is a medium-sized bank with assets of over $1 billion. It is a community-focused financial services company with 35 branches in northwest and central Ohio. Providing competent and friendly service to its customers is critical while keeping the costs of banking affordable.

Bank employees are encouraged to remember their customers and call each by name.

Historically, each branch manager did purchasing. However, within the last five years, the bank created a centralized supply management department that is responsible forthe bank’s major purchases. For instance, this group handled the sourcing when the bank upgraded its information system to make online banking easier for its customers.

Based on her experience in the automotive industry, Karen knew strategic sourcing could be a way to increase the value of supply management at Best Banks. As a first step she conducted a spend analysis. After information systems (30 percent), the two top spend categories for the bank were temporary personnel (15 percent) and printadvertising and promotional materials (8 percent).

Karen decided to explore each of these categories in more detail. She found that each of the branch locations selected and made its own decision for which temporaryagency to use. In fact, over 20 different temporary personnel agencies were being used. The marketing department at the bank’s headquarters made all of the sourcing decisions for advertising spend, and Karen was surprised to learn that the supply management department was not involved.

Questions

1.	Using the Kraljic’s Supply Matrix, how would you categorize information technology,temporary personnel, and advertising as spend categories for the bank? Why?
2.	What recommendations do you have with respect to sourcing temporary personnel? Why?What challenges should Karen expect to encounter?

Answer 1

With respect to sourcing temporary personal, Karen can work with his central procurement team to look for agencies who can help source temporary personal in branch locations. With one or few agencies, there could be more process standardization in sourcing of temporary staff as per the requirement in each office location. Moreover, required experience and skill set of temporary staff can be better aligned if it is done with one or few agencies instead of multiple local staffing agencies.

Procurement team can also ensure right pricing arrangement and contracting with these agencies to bring more cost effectiveness and favorable impact profitability.

Karen may encounter few challenges in driving this change in sourcing

- New agencies need to have adequate reach and temporary staff availability to cover for all local and remote office locations

- Referrals remain the top source of good quality candidates for agencies. But, building the referral pipeline is a time and resource intensive process. This may become challenges for appointed agency (s).

- Ensure requirement of local office in terms of personal (language, culture, personalization etc.) is addressed appropriately by appointed agency (s). There is a risk if strategy does not work in terms of supply risk of temporary personal and potential adverse impact on customer service.