Northrop rationalizes spending on contingent work force.
Northrop Grumman IT has a large contingent work force with 750 temporary employees and has contracts with dozens of staffing companies to hire and manage these employees.
Because the highly skilled workers are hired by numerous departments, the company, a sector of Northrop Grumman Corp., had limited control of its spending on temporary employees.
Michael Patrick, executive director of work force recruitment and planning at Northrop Grumman IT, said the company considered using the Ariba Inc. spend management software it had deployed to get a handle on its contingent work force spending. But Northrop opted instead to deploy Denver-based IQNavigator Inc.s namesake suite of services procurement and spend management software. The first phase of the deployment wrapped up in May.
One benefit of the contingent work force management software that Northrop Grumman IT expects to see is a reduction in the amount of money it spends on temporary hires. It could achieve this by finding out which staffing companies it works with are getting the greatest volume of business and then negotiate volume discounts with the largest of these. IQNavigator produces reports that show which staffing companies are being tapped most often.
Another savings that may be achieved is through automating the process of paying temporary employees, Patrick said. Traditionally, the employee submits a paper time and expense report to his or her manager at Northrop Grumman IT, who approves it and sends it to the procurement department, which routes it to the staffing company that employs the worker. The staffing company sends an invoice to Northrop Grumman ITs accounts receivable department, which then pays the bill.
With IQNavigator, the temporary employee can submit a time and expense report each week electronically over the Web. The manager, likewise, approves the report via a Web browser. This sets off a series of transactions that cascade through Northrop Grumman ITs Ariba e-procurement system and Lawson Software Inc. financials software and eventually end up at the accounts payable department.
The company uses IQNavigators optional payment service that sends electronic payments to each of Northrop Grumman ITs staffing vendors and then posts one consolidated bill back to the company. Consolidating the spending information helps the company see the actual size of its spending on contingent labor, Patrick said.
The process speeds up payments so much that the staffing vendors themselves agreed to pay the monthly fee for the IQNavigator software and payment service.
"The value of using a vendor management solution is to improve our strategic interaction with those vendors," Patrick said. "The suppliers believed that theyll get at least what they are paying for, and I believe they will get more."
Sometime next year, after the company gets comfortable with the IQNavigator system, Northrop plans to use the software to compare the staffing companies it works with "to see how each vendor is doing," Patrick said. "One goal is to provide increased access to small and disadvantaged companies. We will invite additional businesses like that [to bid on staffing requests] if we arent using enough of them."
Saving money isnt the only, or necessarily the biggest, benefit that Patrick is looking for. He also hopes to improve the hiring process by getting a more qualified pool of applicants to consider each time a new job is put out for bid.
Although Northrop hires some lower-level administrative help through the IQNavigator system, the software is primarily used for hiring engineers and other professionals. For that reason, finding the right person for each project is crucial.
By the time IQNavigator is fully deployed by the end of the year, Patrick expects to have all 750 temporary workers using the software.
As time goes on, Patrick foresees an increasing need to fill temporary jobs fast. "As we look at the changing work force and the types of talent we will need, [finding the right people] is going to get worse," Patrick said. "The pool [of IT] talent continues to shrink.
"I believe the contingent work force is going to be a critical and significant portion of our work force."