Keeping an Eye on the Purchasing Ball

The Concept of Outsourcing Outsourcing companies provide dedicated services and personnel to bring expertise to an organisation, and often costs can be reduced and efficiencies increased as a result. Liken it to an in- house team - accountancy, purchasing, internal audit, etc - looking after the interests ofvarious different departments, all with their own specific budgets, goals and requirements. Again, one of the biggest advantages to this type of outsourcing is ,economies of scale' - in that an outsourcing company can process much more cheaply because it is doing it on a much larger scale than individual organisations, and much more efficiently because of its specialised nature - not to mention its access to state ofthe art technology and specialist knowledge and experience. You may have identified several processes within your organisation that would benefit from being moved to an outsourced environment - but how do you go about it? What are the key things you should be considering? The starting point is to identify exactly what you want to achieve by outsourcing cost savings, better quality of information, reduced risk, etc. Then you need to assess exactly what your current in-house operations do, and their true cost. This is the most important part of the process, and the one most often missed out, but with this information you can approach outsourcing organisations to obtain 'true' comparable quotes. There is a growing number of outsourcing suppliers out there, so it's important to choose carefully, following best practice contract negotiation and management techniques. Make sure you deal with someone who understands your sector. The key is to find a supplier willing to get to know your organisation - how it works, what its priorities are, what you need to achieve by outsourcing - before tailoring a service for you. The next step is to ensure that adequate service level agreements are in place, so there's no slippage on quality of service, and the expectations of all concerned are met. The beauty of outsourcing is that you, the client, can retain all the control, save money and benefit from increased analysis and management information. If these things aren't happening, you should be asking why. Contract Management - building and maintaining relationships with suppliers The implementation of effective contract management is essential in the modern business environment where cost effectiveness, quality management and service excellence are key to retaining competitive advantage. The effort and costs involved in the establishment of a constructive procurement partnership are to no avail ifthe contract is not managed properly throughout its "life". A pro-active and wellplanned approach is needed Successful contract managers ensure high levels ofservice delivery from suppliers by building and nurturing constructive contract partnerships. So what constitutes successful contract management? For most organisations, it is successful delivery of a favourable contract to provide the goods or services. But equally important is the need to ensure that best practice is followed at all stages. A few things to consider are: Sourcing Ensure that the suppliers selected at this stage are viable and able to grow and develop their services to reflect the growing needs of your organisation. Consider suppliers who are proactive. They will share new ideas and working practices with you drawn from their experiences with other clients. Check to ensure that suppliers have ethical trading policies, particularly if sourcing goods from abroad, and look for companies which share similar values to your own. Tendering Your tendering process and documentation should be professional, formal and comprehensive. This is the first impression suppliers have of your organisation. You want to be attractive to them as potential customers, but will they want to do business with you? …