Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing

CHAPTER TWENTY-TWO

Sourcing Services

EVER SINCE STRATEGIC SOURCING WAS DEVELOPED, there has been great debate as to the effectiveness of this process when sourcing services. Many argue that purchasing intangibles is too complex, services are too customized, and suppliers too diverse to adhere to the guidelines of strategic sourcing. The phrase “but we are different . . .” often arises when speaking to end users about oversight or involvement from an external group, such as purchasing or finance.

Fundamental strategic sourcing principles can be utilized to create competition, evaluate offers, and negotiate contracts for services, regardless of the targeted purchase. While the obstacles and challenges you face when sourcing services may be different from those of sourcing products, in the end you can see the same effectiveness of results from the efforts put forth. Conversely, some challenges that you encounter with sourcing services are also very similar to those you might experience while sourcing goods, such as gathering pertinent spend data, clarifying the scope of work, and overcoming internal or external political issues.

Services are vital to any business because they provide crucial operational functions that your own business may not have the resources or knowledge to perform internally. For a medium-sized business, this can encompass dozens of essential services that are needed across a wide range of departments, from operations and facilities to finance and marketing. ...