6 Tips to Manage Temporary Labour Spend

Temporary labour has become an essential component of workforce management. While it offers flexibility and scalability, it can also lead to significant costs if not managed effectively. Here are six tips to help you optimise your temporary labour spend:

1. Implement a Vendor Management System (VMS)

A Vendor Management System is a crucial tool for managing temporary labour spend. It provides a centralised platform to track and manage all aspects of your contingent workforce, including:

●    Requisition and approval processes
●    Time and expense management
●    Invoicing and payment
●    Supplier performance metrics

By implementing a VMS, you can gain better visibility into your temporary labour spend, streamline processes, and identify cost-saving opportunities. Many organisations have reported savings of up to 15% on their contingent workforce spend after implementing a VMS.

2. Establish a Preferred Supplier List

Creating a preferred supplier list can help you negotiate better rates and ensure consistent quality of temporary workers. By consolidating your spend with a select group of suppliers, you can:

●    Leverage your buying power for better rates
●    Develop stronger relationships with suppliers
●    Ensure compliance with your company's standards and policies
●    Reduce administrative overhead

Remember to regularly review and update your preferred supplier list to ensure it continues to meet your needs and provides competitive rates.

Read Our 10 Top Tips for Setting a Preferred Supplier List (PSL) Blog

3. Implement Rate Cards

Developing standardised rate cards for different job categories and skill levels can help prevent overspending on temporary labour. Rate cards should:

●    Be based on market rates and your company's budget
●    Include different rates for various skill levels and experience
●    Be regularly reviewed and updated to reflect market changes

By enforcing rate cards, you can ensure consistency in pricing across your organisation and prevent individual managers from overpaying for temporary staff.

4. Optimise Workforce Planning

Effective workforce planning can significantly reduce unnecessary temporary labour spend. Consider the following strategies:

●    Forecast your labour needs based on historical data and projected business demands
●    Cross-train permanent employees to handle multiple roles
●    Use flexible scheduling for permanent staff to cover peak periods
●    Implement a mix of full-time, part-time, and temporary workers to optimise costs
●    Consider changing your shift patterns to use permanent staff during high cost times and temporary during the less expensive

By taking a strategic approach to workforce planning, you can minimise last minute temporary hires, which often come at a premium.

5. Monitor and Analyse Spend Data

Regular monitoring and analysis of your temporary labour spend can help identify trends, inefficiencies, and opportunities for cost savings. Key metrics to track include:

●    Total spend by department, job category, and supplier
●    Average bill rates by job category
●    Time-to-fill for temporary positions
●    Temporary-to-permanent conversion rates

Use this data to make informed decisions about your temporary labour strategy and identify areas where costs can be reduced.

6. Consider a Managed Service Provider (MSP)

For organisations with significant temporary labour spend, partnering with a Managed Service Provider can be an effective way to optimise costs and improve efficiency. An MSP can:

●    Manage your entire temporary workforce program
●    Negotiate with suppliers on your behalf
●    Ensure compliance with labour laws and company policies
●    Provide advanced analytics and reporting

While there is a cost associated with using an MSP, many organisations find that the savings and efficiencies gained outweigh the investment.

By implementing these six tips, you can gain better control over your temporary labour spend, improve workforce efficiency, and ultimately drive cost savings for your organisation. Remember, effective management of temporary labour is not just about cutting costs, but about optimising your workforce to meet business needs in the most cost-effective manner possible.

Datum RPO, as a leading Managed Service Provider, offers comprehensive solutions to optimise your contingent workforce management. Our vendor-neutral approach ensures unbiased selection of the best talent at competitive rates. We leverage cutting-edge technology to streamline processes, enhance visibility, and ensure compliance. With our expertise, you can expect significant cost savings (typically 6-16%), improved workforce quality, and reduced administrative burden. Datum RPO's scalable solutions adapt to your changing needs, whether you're looking to manage a handful of temporary workers or a large contingent workforce across multiple locations. By partnering with Datum RPO, you gain a strategic ally committed to transforming your temporary labour management, driving efficiency, and delivering measurable results to your bottom line.