Jun 02, 2014 the book includes a lengthy directory of firms involved in outsourcing services and provides several chapters to guide employees who are facing the possibility of having their jobs outsourced. In turn, a company which does so expects to increase its focus on core spend and competencies, reduce overall costs and. From endtoend procurement outsourcing to point solutions like category management, strategic sourcing and procurement. The black book of outsourcing posted by supply management. Procurement outsourcing continues to be one of the fastest growing sectors of the outsourcing market. Outsourced procurement is a good option for all those companies who have no internal competencies, but are willing to develop procurement functions quickly. Outsourcing in procurement and supply chain definition outsourcing is the process of contracting with the most suitable expert third party service provider cips. Stay in touch and up to date through member only events and branch meetings. The types of activities can vary by organization, but in general they include tasks such as developing and executing simple contracts that involve little negotiation and are not integral to the. Api outsourcing industry leader api outsourcing has been selected by the black book of outsourcing annual survey and resource as one of the top outsourcing companies within the ap industry. Cost advantage for many firms, cost is an important reason for outsourcing, especially for supplies and services that are nonvital to the firms operations and competitive advantage. Revised for 2009 and beyond, the black book of outsourcing is a comprehensive. Unfortunately, reducing headcount is an effective way to meet those goals.
The lowest growth segment is compliance, budgets and control with 57%. It outsourcing from small beginnings in the 1980s it outsourcing has evolved into a sophisticated global market and most companies, no matter how traditional their business model, have outsourced one or more layers of their it function. The 10 hidden costs of outsourcing procurement cscmps. Outsourcing procurement at the project and agency levels 42 appendixes 42 1 case studies on the two roles of procurement agents 45 2 the success story of consip. Furthermore, outsourcing increases the distance and the number of touch points between order entry and order fulfillment. While they have a bit of an it or businessprocess outsourcing slant, we think they are very. We recommend this book to managers whose companies are considering outsourcing and to those who hope for careers in the burgeoning outsourcing industry. In the public sector, outsourcing is the contracting out of functions that historically have been provided by public employees. Organisations buy or outsource materials, components andor services from suppliers for many reasons. This paper is a part of this research and aims at building an empirically validated outsourcing process model and discussing the procurement functions role in different phases and activities of. Procurement categorisation and vendor management of indirect materials and services commonly referred to as indirect procurement are typically the. With more than 150 ondemand onshore category experts, a dedicated sourcing center of excellence coe, a dedicated category training academy, transformation capabilities, technologyenabled solutions and customercentric focus, wns is at the forefront of the evolving procurement outsourcing market. Api outsourcing has been selected by the black book of outsourcing annual survey and resource as one of the top outsourcing companies within the ap industry.
At a simple level procurement outsourcing can involve migration of infrastructure. It shows that procurement outsourcing is on the right path, but still has some way to go. From endtoend procurement outsourcing to point solutions like category management, strategic sourcing. The companies included on this years black book ranking are the leaders in helping global corporations derive maximum value from this critically important aspect of their business, said. To understand how this role is changing, we must understand what purchasing is all about, starting with the primary objectives of a worldclass. But the combination of changing business dynamics and the original outsourcing assumptions has revealed costs that may prompt companies to reevaluate their outsourcing decisions. The procurement function can be a focus of outsourcing efforts if the organization determines that certain routine activities fall into this category. The procurement functions role in strategic outsourcing. This paper is a part of this research and aims at building an empirically validated outsourcing process model and discussing the procurement function s role in different phases and activities of.
Often good procurement strategies can be the difference between a profitable company and a failed business. The procurement functions role in strategic outsourcing from. As with any outsourcing trend, a significant driver is to reduce costs. Procurement categorisation and vendor management of indirect materials and services commonly referred to as indirect. Procurement outsourcing is the transfer of specified key activities relating to sourcing and supplier management to a third party, called the procurement service provider psp. Procurement outsourcing services, indirect procurement bpo. The decision to outsource the procurement function the.
Outsourcing is sanctioned inthe increasing popularityand use of the ulrich model 1997. Outsourcing transactional procurement, like order processing or the management of invoices, is now relatively common. Versions of the hr function depend heavily on the perceptions of senior management, their expectations and what they interpret as organisational requirement. Through the construction of a broader hr community, ulrich encourages the hr function to assume. Outsourcing procurement is often undertaken by very large companies to save money. More than 24,000 global responses from various outsourcing users were analyzed to determine the bestinclass outsourcing vendors. Include makebuy decisions, choosing supply sources, procuringscheduling raw material, making decisions about verticalvirtual integration, assessing supplier performance, managing inventory, and managing supplier agreements. Outsourcing procurement in the public sector 2 these cases, since procurement is not normally a core function, it may be more ef. G, a leader in the globalization of services and technology and a pioneer in managing business processes for. But, when spend management is a core function that adds significant value to the bottom line, as it is in many midmarket companies, you can eventually support a goodsized team in house, because there is greater spend to leverage and a. However the procurement of goods and services are not a new subjects. How to manage the changes, challenges, and opportunities. Outsourcing in procurement and supply chain what is it. Genpact ranked top procurement outsourcing provider in black book 2009 annual survey genpacts 3rd consecutive year as no.
However, some basic issues need to be considered before a decision to outsource the public procurement function can be reached. List of books and articles about outsourcing online. Examining the role of the chief procurement officer in the outsourcing decision and process. The black book of outsourcing ebook by douglas brown.
Traditional outsourcing focuses on labor and process cost savings rather than the maximization of category and compliance management opportunities. Clearwater, fl november 25, 2008 chief financial officers and top procurement executives in the united states and u. Pdf outsourcing the business services researchgate. Purchasing outsourcing contracts procurement jobs, employment. Outsourcing is a good choice when the cost andor skills required to manage the function are out of balance.
It is the contracting out of functions, tasks, or services by an organization and can often involve replacing a core workforce with parttime or contract workers who receive fewer benefits. Our solutions help manage indirect and nonstrategic spends through process excellence and they deliver sustainable long term savings to the bottom line. The following are some significant differences between traditional function outsourcing and procurement outsourcing to a psp with a bestinclass managed services offering. There can be several drivers for this course of action, including cost reduction, which will be discussed in this paper. Wns south africa provides advanced procurement outsourcing solutions that enable clients to rapidly improve their business performance. Read the black book of outsourcing how to manage the changes, challenges, and opportunities by douglas brown available from rakuten kobo. The decision to outsource the procurement function it is imperative that the organisation considering procurement outsourcing needs to truly understand how important, strategic and critical procurement actually is to their business success. On the other hand, research indicates that procurement has had relatively moderate involvement in the outsourcing investigations in many firms. On the other hand, research indicates that procurement has had relatively moderate involvement in. The subject of outsourcing raises yet another set of issues, such as whether or not there actually is a market to outsource the procurement function.
It is the operational transfer of one or more business processes from an origin company to an external provider who then becomes accountable for the outcome of the. Getting a return on an investment with an outsourced supplier. Genpact top outsourcing vendors the economic times. In the black book of outsourcing, outsourcing gurus doug brown and scott wilson demystify the subject and show executives and staffers alike how to successfully assess and implement outsourcing, communicate internally and with partners, measure performance, and lead outsourcing transitions. Third party procurement providers sell themselves based on return on investment. Nine keys to worldclass business process outsourcing criminal practice series. The companies included on this years black book ranking are the leaders in helping global corporations derive maximum value from this critically important aspect of their business, said doug brown, managing partner of the brownwilson group. The thing to remember is that outsourcing any function is a way of spending money to save money. Are common theories of outsourcing useful in predicting the. Procure goodservices to meet planned or actual demand. Procurements role in outsourcing blc 30405 procurement. Apply to director of procurement, procurement manager, procurement analyst and more. The objectives of a worldclass procurement organization move far beyond the traditional belief that procurement s primary role is to obtain goods and services in response to internal needs.
Lange selling outsourcing services in the digital age. The book includes a lengthy directory of firms involved in outsourcing services and provides several chapters to guide employees who are facing the possibility of having their jobs outsourced. If procurement outsourcing is to yield the expected benefits, its adopters will need to carefully weigh the comparative costs and risks of insourcing vs. Only in the past ten years, however, has the outsourcing of strategic procurement activities, like supplier selection, contract negotiation or specification management, become more widespread exhibit 1. Outsourcing production overseas used to be a cantmiss strategy. Building your procurement and sourcing function for scale. Procurement outsourcing in small to intermediate companies grin. Procurement categorisation and vendor management of indirect materials and services commonly referred. In the real world, weve found that clients dont have cookiecutter issues, so we dont use one when helping them meet their procurement objectives. Bpo firm, has been named the top procurement outsourcing provider by.
We have briefly mentioned earlier that procurement function should play a major role in makeorbuy decisions. Procurement outsourcing consists of transferring specified key activities relating to sourcing and supplier management to a third party. Genpact ranked top procurement outsourcing provider in black. Procurement outsourcing is transferring specific procurement activities including sourcing, category management, transaction management, or a combination of some, or all of them to a procurement bpo provider. Procurements role in outsourcing we have briefly mentioned earlier that procurement function should play a major role in makeorbuy decisions. A major contender in everest groups procurement outsourcing po po service provider landscape for europe with peak matrix assessment 2015 services sourcetocontract services we offer sourcetocontract services that encompasses the entire sourcing cycle to optimise spending, deliver cost savings and strengthen compliance. Gep provides clients a flexible set of procurement outsourcing options, custom configured to meet their specific needs. Core skills, as a general rule, should be kept inhouse. Influence of business process outsourcing practices on. Enhance your network and get connected to a global community of 120,000 in 150 countries. Creating value through procurement outsourcing mckinsey. Business process outsourcing is the process by which firms contract other firms to carry out. Definitive guide to outsourcing your procurement vroozi.
Procurement requires a great deal of focus on cost saving, profit maximization and compliance. The outsourcing of purchasing procurement and purchasing. Procurement outsourcing services, indirect procurement bpo gep. Black book of outsourcing, douglas brown and scott wilson, 2005. Top ap outsourcing vendors outsourcing accounts payable. Outsourcing is used by businesses to realize cost savings and increase flexibility. In 2009, the study of black book of outsourcing 11. May 02, 2005 you know, the black book of outsourcing is an authoritative and engrossing story of how outsourcing should and does work. Poor planning and oversight in such a highly complex demand and supply chain leads to unnecessary expenses. You know, the black book of outsourcing is an authoritative and engrossing story of how outsourcing should and does work.
Research conducted in 2015 revealed 84% of companies outsource some manufacturing activity, with the majority of respondents 79% planning to continue with their current outsourcing operations or increase them over. However, this particular book was from the 2005 edition and therefore a lot of things had changed in the fast moving world of outsourcing, including the list of suppliers and advisers that the book boasts of. Again for this year, wilson and brown have completed a report specifically on the state of procurement outsourcing the black book of procurement outsourcing, based on survey data from a large respondent pool of more than 3500 procurement and supply chain executives and managers from across the globe. This paper is a part of this research and aims at building an empirically validated outsourcing process model and discussing the procurement functions. Whether the choice is to outsource the procurement function in its entirety or incrementally, organizations have reported greater spend visibility, reduced procurement costs, and improved price savings as. However, the outsourcing of noncore functions can often be completed quickly, efficiently, and costeffectively by an outside specialist.
Gep procurement outsourcing faq procurement services. There, i really experienced what it meant to outsource procurement functions. Genpact ranked top procurement outsourcing provider in. Reasons for buying or outsourcing blc 30405 procurement. Revised for 2009 and beyond, the black book of outsourcing is a comprehensive guide and directory for the evolving field. Procurement outsourcing, a strategic imperative source. The tradeoffs of outsourcing procurement supply chain 247. Procurement outsourcing po involves the outsourcing of parts or all of a companys procurement functions people, processes, systems, and expenditures to an external service provider. The black book of outsourcing and millions of other books are available for amazon kindle. Nov 25, 2008 clearwater, fl november 25, 2008 chief financial officers and top procurement executives in the united states and u. Oct 04, 2005 access all areas of the cips knowledge online library including tools and templates and supply management stories.
Hr, finance, procurement, customer service, and the wider back office function. The belief that there are functions which are best. Today, the procurement bpo focus is on indirect noncore procurement. Procurement outsourcing is the transfer of specified key procurement activities relating to sourcing and supplier management to a third party perhaps to reduce overall costs or maybe to tighten the companys focus on its core competencies.