Comments on: Insights on Procurement Outsourcing http://360vendormanagement.com/2008/01/18/insights-on-procurement-outsourcing/ Best Practices in Outsourcing and Vendor Management Thu, 05 May 2011 13:47:00 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Purchasing Services http://360vendormanagement.com/2008/01/18/insights-on-procurement-outsourcing/comment-page-1/#comment-1107 Purchasing Services Mon, 04 May 2009 10:35:50 +0000 http://360vendormanagement.com/2008/01/18/insights-on-procurement-outsourcing/#comment-1107 It is not about the solutions... for the last 5 years, the solutions for procurement have started out reasonable and have improved. I think there are 4 reasons why most procurement outsourcing fails: 1. It is about change. Most Corporations are not prepared to manage the necessary change to gain the maximum value from a procurement improvement program, especially with indirect purchases. 2. In a decentralized Corporate environment, the P&L is King. Therefore, if P&L Director does not buy into the outsourcing, there will be no result. 3. Outsourcing organizations let their client lose sight of the prize with the potential aggregated buying savings. The prize is simple; catalogs on-line with contractual agreed pricing and contract management. These 2 items should more than deliver the business case. 4. Lastly, most procurement organizations need a total revamp. There are old school buyers who are not ready for the new model. It is not about the solutions… for the last 5 years, the solutions for procurement have started out reasonable and have improved.

I think there are 4 reasons why most procurement outsourcing fails:

1. It is about change. Most Corporations are not prepared to manage the necessary change to gain the maximum value from a procurement improvement program, especially with indirect purchases.

2. In a decentralized Corporate environment, the P&L is King. Therefore, if P&L Director does not buy into the outsourcing, there will be no result.

3. Outsourcing organizations let their client lose sight of the prize with the potential aggregated buying savings. The prize is simple; catalogs on-line with contractual agreed pricing and contract management. These 2 items should more than deliver the business case.

4. Lastly, most procurement organizations need a total revamp. There are old school buyers who are not ready for the new model.

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