If you’re wondering whether your procurement outsourcing project is destined for success, there are four things you can do to ensure your success. Ensure that your project is vetted by a legal expert, create a strong contract with your service provider, and organize diversity awareness training programs. Once you have mastered these basics, you’ll be well on your way to procurement outsourcing success.
Reviewing the outsourcing contract by a legal expert
A thorough outsourcing contract is a crucial part of the Team procurement outsourcing process. It should include all details regarding the outsourcing relationship and the timeframe and schedule for completion of work. The contract should also spell out IP protection and Non-Disclosure provisions. A legal expert should review the contract to identify any discrepancies.
Lastly, the contract should align incentives between the company and the outsourcing provider. A strong agreement should focus on measurable metrics that will result in long-term savings. It is crucial for both parties to understand and agree on these targets. Misaligned incentives can lead to failed relationships. For example, the outsourcing provider may want to focus on quick wins by focusing on lowest-cost suppliers, which may mean sacrificing quality.
Creating a strong agreement with your service provider
Successful procurement outsourcing requires a strong agreement between the customer and the service provider. The agreement must be aligned with the business’ goals and minimise disruption. The service provider should be willing to work cross-functionally to meet the needs of the customer, and must be willing to share detailed information with the client.
The agreement must also focus on the key components that drive success. These include the statement of work, assumptions and dependencies, roles and responsibilities, and the governance process. The process should also be well documented and include a clear change order process. In addition, it should be based on the objectives of both parties and be measurable.
While acknowledging the outsourcing agreement does not require a signing ceremony, the agreement must be tailored to the needs of the client and service provider. Each outsourcing transaction is unique and the final shape of the agreement will depend on the underlying client buyer values, the scope of the solution, and the capabilities of the service provider. As a result, the focus shifts from the signing ceremony to the critical elements of the agreement.
Organizing diversity awareness training programs
Many companies have diversity programs, but most of them are reactive rather than proactive. They are often no more than token departments with no real influence over procurement decisions. Fortunately, there are many ways to make these programs more effective, from partnering with chambers of commerce and councils to developing mentorship and training programs.
One of the most important benefits of inclusive procurement is the creation of economic opportunity in disadvantaged communities. According to the U.S. Small Business Administration, there are nearly 8 million minority-owned firms in the United States, and the National Minority Supplier Diversity Council reports that these businesses generate over $400 billion in economic output. In addition, certified MBEs generate 2.2 million jobs and preserve 49 billion in annual tax revenue.
Another advantage of incorporating diversity awareness training is that it enables businesses to attract and retain more diverse suppliers. As a result, companies can increase their chances of successful procurement and outsourcing projects. In addition, these programs can help organizations retain employees who are underrepresented in the workforce.
As part of supplier diversity programs, companies should implement a comprehensive supplier diversity policy that outlines the program’s goals and outcomes. A supplier diversity policy must be aligned with the overall business strategy and must be owned by all stakeholders. In addition, ownership of the program should not be confined to the procurement function, but should be spread throughout the organization. The business units responsible for tracking and evaluating the program should be accountable for the success of the program.
