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Computerworld - Like other big, geographically dispersed companies, Shell Oil Products US spent a lot of money on temporary contract labor to fill short-term requirements for everything from accounting to IT consulting.
But while the Houston-based subsidiary of Shell Oil Co. still spends nearly $100 million annually for contract labor, it now takes a more cost-effective approach, thanks to its implementation late last year of a contingent workforce management system.
The Web-based system from Denver-based IQNavigator Inc. helps Shell Oil Products automate its contingent workforce management processes, including supplier qualification, requests for proposals, time-and-expense entries and invoicing.
Prior to the initiative, functional and business departments throughout Shell Oil Products applied a hodgepodge of manual processes to manage temporary and contract labor, says Kim Chapman, team leader for the contingent workforce management project. "We were spending quite a bit of money, and the team was charged with looking at how we could reduce our spending" through improved sourcing and better rates, says Chapman.

Credit: Michael Bartalos

The team, which included representatives from Shell Information Technology International Group -- an IT services arm that supports multiple Shell divisions -- set a goal of reducing contingent workforce spending by 8% annually. Thanks to the use of IQNavigator, a set of process improvements and a reduction in the number of labor suppliers it worked with, Shell Oil Products was able to surpass its annual cost savings target in less than two months.
Reducing the number of contingent labor suppliers was one of the first steps. For instance, Shell Oil Products had been working with more than 20 suppliers of temporary administrative personnel, says Chapman. But it's now working with just four preferred suppliers.
By consolidating, Shell Oil Products is in a better position to negotiate labor rates, and there are fewer supplier relationships to manage. The consolidation, as well as automation and process improvements, lets Shell Oil Products get volume and early-payment discounts from its labor suppliers. By virtue of these discounts, the company has cut its payments to new contractors by an average of 28%, Chapman says.
The labor vendors like it, too, because it means they can become preferred providers for all of the divisions of the company, not just one or two.
"It's a vendor's dream. It's still up to you to perform, but now you won't be limited" in the number of corporate divisions you can work with, says Pamela O'Rourke, president of Icon Information Consultants LP, one of the preferred consultants that Shell Oil Products taps for temporary labor.
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