Introduction
A well-managed outsourcing arrangement can deliver sustained savings or added value of between 30% and 50%. But achieving this level of benefit requires not only a sound sourcing strategy and a comprehensive sourcing implementation approach but alsoand perhaps most importantlyan effective sourcing management framework in place throughout the life of the relationship.
Scope- The aim of this report is to answer key questions about the final phase of the sourcing journeynamely ongoing sourcing management.
- This report provides best practice and lessons learnt for sourcing management, basid on experience from over 700 Orbys sourcing engagements.
Highlights
Industry leaders recognize that the short-term costs of implementing effective sourcing management structures are more than outweighed by the potential costs of termination and re-competition should these relationships fail.
Reasons to Purchase- In Orbys' experience, a well-managed outsourcing arrangement can deliver sustained savings or added value of between 30% and 50%.
- A self-assessment scorecard is provided for an initial assessment of the effectiveness of your current sourcing management framework.
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- OVERVIEW
- Catalyst
- Summary
- Methodology
- EXECUTIVE SUMMARY
- Sourcing management starts with a strategy review
- Understand the difference between a benchmark and a health check
- Transformation of relationships is a specialist project
- The importance of the retained organization
- Table of Contents
- Table of figures
- Table of tables
- INTRODUCTION
- The benefits of sourcing management
- Framework for effective sourcing management
- SOURCING STRATEGY
- Start with a sourcing strategy review
- Recommendations arising from a sourcing strategy review
- Reviewing the sourcing strategy regularly
- Self-scoring assessment scorecard
- The value of using a sourcing advisor to support sourcing management
- DEAL PRINCIPLES
- Revisiting deal principles regularly
- SOURCING TRANSFORMATION
- Drivers for sourcing transformation projects
- Managing a sourcing transformation project
- Case study: ITO sourcing transformation for major public sector organization delivers £2 billion in savings
- Obtaining executive support
- Structuring the requirements
- Renegotiating existing contracts
- Managing the department's implementation responsibilities
- SERVICE MANAGEMENT
- Improving current service management
- Service management with multiple suppliers
- Supporting service contract managers
- PERFORMANCE MANAGEMENT
- The need for active management of suppliers
- Balanced scorecard for outsourcing performance
- Regular performance review meetings
- RELATIONSHIP MANAGEMENT
- Improving relationships with suppliers
- Dealing with a breakdown of relationship
- BENCHMARKING AND HEALTH CHECKS
- The difference between a benchmark and a health check
- The limits of benchmarking as a negotiation tool
- Approaching a benchmarking exercise correctly
- Use benchmarking sparingly, with regular health checks
- VALUE ASSESSMENT
- The value of value assessments
- Understanding the sources of value in existing relationships
- Quantifying outsourcing value in cash terms
- VALUE REALISATION
- Driving suppliers to deliver additional value
- Does value realization really work in practice?
- INDIVIDUAL SUPPLIER STRATEGIES
- A strategy for each supplier
- Using developed supplier strategies
- RETAINED ORGANIZATION
- The importance of the retained organization
- Keeping the RO up to scratch
- RENEGOTIATION AND RE-COMPETITION
- Regular renegotiation prevents deal drift
- Planning a proper renegotiation
- What happens if the supplier refuses to renegotiate?
- TERMINATION AND EXIT
- Considering contract termination
- Questions to answer before planning a termination
- IN SUMMARY: KEY FACTORS FOR SUCCESSFUL OUTSOURCING MANAGEMENT
- Top tips for achieving maximum potential from existing sourcing arrangements
- CASE STUDIES
- Value assessment for existing ADAM relationships: global agrochemicals company
- Pricing and contractual health check prior to contract extension: financial services group
- Health check: pricing
- Health check: contract
- APPENDIX
- Sourcing Management Scorecard
- Orbys Consulting
- Disclaimer
- List of Tables
- Table 1: Sourcing management effectiveness scale
- Table 2: Sourcing management scorecard
- List of Figures
- Figure 1: Orbys sourcing management framework
- Figure 2: Sourcing strategy: the overall approach
- Figure 3: A balanced scorecard for outsourcing performance
- Figure 4: Orbys relationship management model
- Figure 5: Orbys approach to health checks and benchmarking
- Figure 6: Typical output of an Orbys outsourcing value assessment
- Figure 7: Value realization
- Figure 8: Model RO
- Figure 9: Phased approach to renegotiation and re-competition
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