Thursday, 27 March 2008

Outsourcing is usually considered appropriate for the commoditised elements of functions (IT, HR, Finance, Indirect procurement, security, catering) for cost and process efficiency. The outsourcing suppliers generally have systems and scale to be able to deliver better output and performance at lower cost. In purchasing this is already happening on indirects and even buying/ ordering through P2P systems. Is the next stage supplier sourcing and price management which could be done by global market experts?
 

There are a growing number of companies turning to outside help to source suppliers, particularly in the FE and in E-Europe. The reason seems to be that whilst it is easy to find a supplier, finding the best suppliers involves lots of research that most buying companies are not geared up for [resource / software / linguistic capabilities etc.] Also, most mid tier companies are still not enjoying the benefits of eRFx / online negotiations etc. Outsourcing the sourcing an "price management" gets to the benefits immediately without the learning curve.
 

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Can mid-sized companies really afford to keep a purchasing department that performs all the functions necessary? Outsourcing the more time intensive tasks of finding and validating new suppliers to specialist providers that hold the systems and expertise and, in the global market place, the language skills necessary for the initial contact must be a more efficient way than controlling these tasks in-house.
 

What about sourcing innovation? Is that something that should or even can be handled internally? It's not even clear where to start looking for technologies that a company does not already use. This must be an opportunity for outsourcing to market specialists??