The Role – Quality Engineers x 2  - manufacturing
 
The Hiring Circumstance – Head of Purchasing for Europe had been charged with reducing costs across the supply chain.  With recruitment representing one of the largest spends, it was an obvious target.

Although HR had resisted cost cutting in this area for a number of years, Purchasing had negotiated a pan-European agreement at a reduced rate which reduced hiring fees by 10%, which was pushed through as policy on the basis that this would cut overheads by almost £100K
 
The Strategy – Exclusively utilise the nominated recruitment supplier.

The Consequence – The recruitment agency in question was able to offer such a reduced rate as all candidate recruiting was carried out by administrators and passive in nature (database search, on-line and media advertising - relying on candidates proactively seeking work). 

Employment for the engineers sought in this particular location was around 120%, meaning that persons possessing such skills found that employment offers came to them, rather than the other way around.

Because the agency was unable to present suitable candidates, the positions remained unfilled.  Under great pressure of workload because of the shortage of these two key staff members, the department failed to follow a critical quality procedure, resulting in a fault in a manufactured component going unnoticed.

The faulty component was supplied to the company’s main customer and, as a result, production at the company was stopped for four entire shifts.  Supplier penalties for stopping production was over €2,000 per minute, costing the company more than a whole year’s net operating profit.   The ‘saving’ on those two hires was €2,300.

The Cost - €4.3million in customer penalties

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