How procurement can drive flexible workforce programs across international borders
Global businesses frequently leverage what’s known as the “flexible workforce” – a combination of independent contractors, contingent workers, Statements of Work (SOW) and other project-based services – to efficiently and cost-effectively meet demand around the world. Engaging with this workforce has many benefits, but, as with many enterprise-wide initiatives, doing so on an international scale can be a complex process.
It’s important for organisations to identify and communicate with the right people internally to get a global external workforce program up and running, all while ensuring that their use of these workers complies with labour laws and business regulations across regions and borders as well as respects cultural norms. Who within a global company is best suited to take this on? The management of the flexible workforce often falls within the responsibilities of those in procurement, due to several reasons.
Many companies already have an operations team in place within the procurement function to manage acquisitions and contracts, making them well positioned to lead external workforce programs. Procurement is also accustomed to adhering to a myriad of compliance regulations within their world, monitoring variances in regulations and changing financial environments. This is an important mindset for managing an external workforce.
At a high level, procurement works closely with their HR counterparts and C-suite executives to ensure cohesive management of the entire workforce. On a business unit level, procurement works with individual managers to help them better understand how managing their external workers within a formalised program can help them gain better visibility and make more strategic workforce decisions.
Many large, multi-country external workforce programs are enabled by a Vendor Management System (VMS), which is a technology platform that automates and simplifies the process for procurement and management of labour and services.
This technology can be configured for global use, so that no matter the country or the regulations, the VMS can ensure systematic compliance. For instance, many countries have complex payment requirements, with exceptions and variances based on hours worked and times arrived and departed. The procurement function is uniquely aware of these exceptions, and with the aid of technology they can prepare themselves to manage the adoption of new policies.
Procurement already has the structure in place to make global expansion a success along with the training and instincts to guide a company through cultural nuances. Therefore, it’s a natural fit for the procurement department to assume leadership of a global external workforce program across all departments and help guide executive leadership through the transition. By using VMS technology, businesses can create repeatable, reportable processes to create automated, efficient processes and a single system of record for greater visibility and to enable strategic workforce planning.
By Arun Srinivasan, VP of Strategy, Fieldglass.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”