This case study looks at the implementation of a Temporary Labour Master Vendor for one of the largest 3PL companies in the UK. The review resulted in a £1.4m cost reduction as well the standardisation of hourly rates/statutory components across all roles, locations and regions.
The client was one of the largest 3PL companies in the UK with a combined network of over 57 depots and 4 sortation hubs. Following an acquisition of a competitor, the agency labour category was highly fragmented.
The preferred supplier list amounted to 30+ suppliers with no standardisation or consolidation of job roles, pay rates or statutory contributions.
A comprehensive review was required to review the supply base and implement standardisation across the category.
- Class 1 Drivers
- Class 2 Drivers
We ran a full review of the agency labour market inviting both national and regional suppliers.
Stage 1 – saw a review of geographical capability, indicative service models and mark-up/cost structure and open-book costings around pre-agreed calculations defined by Procurement to lock-down scope/cost-creep.
Stage 2 – analysed their ability to manage third party suppliers on behalf of the client to supplement their own networks in local ‘pinch points’
A multi-year master vendor solution with a single supplier with responsibility for all agency labour requirements and all locations.
A single rate card across all locations and skill-sets combined with a defined mark-up structure and cost model to account for non-standard roles and to bring transparency to changes in statutory costs, i.e. national minimum/national living wage increases.
- Master vendor solution to manage the supply of all contingent labour to the business.
- Standardisation of hourly rates/statutory components across all roles, locations and regions.
- £1.4m annual reduction in agency labour spend.
- Single point of contact and outsourcing of day-to-day management duties.
- £1.4m annual reduction