What are the key skills required in the retained team following a procurement outsourcing?
This article originally appeared in Outsource Magazine Issue #29 Autumn 2012, as part of a portfolio feature entitled ‘Procuring Excellence’. To read the other parts of this feature, see the introduction and index here.
The retained and the outsourced organisations are essentially two sides of the same coin.
The combined team comprising the outsourcer and the retained team should enable the procurement function to work as a 21st-century organisation – offering an industrialised, high-quality, virtual, global source-to-pay process at an optimal cost to serve. The retained organisation in particular plays a pivotal role in the development of a strong relationship between the business functions (engineering, production, finance, sales and marketing) and the outsourced organisation in delivering seamless services.
In order to allow the procurement function to deliver as a 21st-century organisation, the retained organisation > has to perform three main roles:
A) Partner with the rest of the business and the network of suppliers. In order to partner with business, the retained organisation should possess skills to liaise, interface and partner with other service functions. The key skills required to support this include: strategic planning, overall supply planning and demand alignment, value engineering and cost-accounting, hedging and risk-management, negotiation and contracting and change management.
B) Govern the relationship with the outsourced organisation using “sense and respond”. As a governance arm, the retained organisation should invest in roles and skills that act as nodes for “sense and respond” to ensure integrated service delivery, integrated vendor management and to map and manage interdependencies. The “sense and respond” mechanisms allow the retained organisation to effectively monitor the performance of the processes, reacting only to performance anomalies. As a governance arm, the retained organisation should also have a good understanding of the outsourcing model and strengths of the outsourcing partner to deliver business returns or savings through the combined team.
C) Act as a Centre of Excellence hub and a change agent. The retained organisation should continue to invest in skills for expertise in company specific knowledge such as creating a “Sourcing COE” for commodity management and market knowledge, tax planning, and best practice adoption. In addition, the retained organisation should serve as the change agents to cascade the case-for-change, impact-of-change and education-for-change adoption through the business and supplier community.
In essence, the retained organisation should assume the role of a facilitator and an evangelist to assure and communicate the value that has been created as a result of the outsourcing initiative today and into the future.
By Brian Nolf, Partner & Global SCM Practice Head, Wipro Consulting Services