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Procurement outsourcing "redefining" role
The shift towards global sourcing and offshoring is fuelling a “see-saw” growth of procurement outsourcing, according to a study published by the Everest Research Institute.
The group’s Procurement Outsourcing (PO) Annual Report stated that fewer procurement outsourcing deals were struck in 2007 as companies moved away from “big bang” contracts towards more “phased approach” engagements.
“Procurement outsourcing is redefining itself with the emergence of a ‘phased’ sourcing approach that benefits both buyers and suppliers,” said Katrina Menzigian, vice president, Everest Research Institute.
“This phase-in approach is allowing the opportunity for testing of synergies, scaling up operations, developing industry-specific capability which, in turn, delivers better results and savings. Buyers are also able to ‘experiment’ with procurement outsourcing as they potentially migrate towards a full Source-to-Pay (S2P) strategy.”
Other key findings from the Everest report include the stabilisation of pricing structures, as companies move towards a combination of managed service fee and gain-sharing contracts; and the continued growth of procurement outsourcing in the manufacturing sector, which is, the study suggests, still the dominant PO adopter.
