Understanding sourcing management

Something's wrong so it must be the service provider's fault! How many times have we all heard that?

As the sourcing industry matures, the topic of how we manage outsourcing relationships not only gets more attention but becomes more important. I would propose that clients need to think of this from two fundamental perspectives: what we do and who we do it with.

Dealing with the second item first, a common misconception is that one only needs to manage the service provider. In fact, managing both the service provider and the service buyer is essential. As an example, consider how one would deal with forecasting and demand management, an area driven by the service buyer, if one only manages the service provider.

Looking at the question of what is involved in managing both the service provider and the service buyer, four key domains are observed.

• Performance management (getting the right work done right)
  
• Financial management (validating and managing costs)
  
• Contractual management (ensuring compliance)
  
• Relationship management (setting directions)

Having audited numerous outsourced relationships, it has become clear that those who address all four areas reasonably well typically outperform and have higher satisfaction levels than those who undertake some areas well but don't pay much attention to others.

Which of these dimensions has your organization addressed and for which of the service buyer and service provider? That might shed some light on issues you could be facing.

• Talkback (1)
• Print
• E-mail
• Share
• Alerts

• Do we need more delivery centers?
• Lift-and-shift: Resurgence or flame-out
• Are telcos new drivers of outsourcing industry?
• Deciding to outsource: Is it cultural?
• Outsourced or not, demand must be managed

• Have we started to turn the corner?
• Outsourcing and value for money improvement--incompatible?
• Competition heats up for outsourcing industry
• Outsourced or not, demand must be managed
• Deciding to outsource: Is it cultural?

2009

2008

2007

2006

• When technology costs more than human
• Do we need more delivery centers?
• Will technology divide us further?
• Buying a projector? Try an LED TV instead
• Lift-and-shift: Resurgence or flame-out

Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.