Reducing value leakage: back to basics

Negotiating a good contract, managing volume reductions and managing service reductions are all important steps in terms of sourcing, especially when times are tough.

However, an area that often gets overlooked is value leakage in existing sourcing relationships. TPI research through its Governance Excellence Program has shown that:

• 1. 60 percent of the teams deployed to manage outsourced contracts had no prior outsourcing experience


• 2. 40 percent of the respondents said they provided no initial training to the team staffed for managing the outsourced contracts


• 3. Only 20 percent of the respondents felt that sufficient training was provided to the outsourcing management team.

This would suggest that many companies suffer considerable loss of anticipated value simply because no one is managing performance and expectations sufficiently.

Institutionalization of strong service management and governance disciplines and processes appears to be a "past due" requirement. Act fast and prevent further loss of value, especially in these times when waste cannot be afforded.

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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.