PROCUREMENT In McKinsey ’ s article ‘ Creating value through procurement outsourcing ’, the evolution of outsourcing strategic procurement activities , such as supplier selection , contract negotiation or specification management , is shown to have become more widespread . To make strategic procurement outsourcing a success , McKinsey has highlighted three basic steps : 1 . Outsource strategic buying only in categories where doing so offers clear value . 2 . Have an exact understanding of the sources of that value and how to unlock them .
“ Outsourcing often involves a contract for provision of a complex service and to manage this effectively a resource should be retained which understands the complexities of this service ”
— Malcolm Harrison , CEO , CIPS Group
3 . Choose outsourcing partners that have the capabilities to address those sources of value , then define and implement agreements that maximise the chance of capturing potential savings .
37
WHAT IS OUTSOURCING ?
Outsourcing is the process of finding an external third-party supplier to take on the management and provision of a service . It is generally used for non-core activities and used when a business may not have the skills or the expertise in-house for a product or service , which is often linked with a lack of critical scale , or an in-house investment is needed which can ’ t be prioritised or may need to get something to market quickly . Outsourcing allows for scaling up or scaling down according to need .
Indirect outsourcing is goods and services a business needs to maintain and support its own operations . Direct outsourcing is for goods and services relating to the business product or service .
www . supplychaindigital . com