Further Proof That Indirect Centralization Can Happen Organically

In a post last week, I chastised the concept of outsourcing procurement because of the challenges of centralizing -- or creating a center-led organization -- for indirect spend. Having examined -- and even been involved in the sales, marketing and execution processes -- for different types of direct and indirect outsourcing projects in the past (for all size organizations), I can say that merely tossing a fragmented spend mess to a third party without the buy-in of internal constituents is a recipe for implementation disaster, even if huge savings can be identified in the sourcing process.

In other words, BPO should never be a replacement for centralization internally, which can then lead to the creation of a shared services approach to procurement and sourcing operations, and more strategic outsourcing decisions. Further proof of the power of centralization comes from a recent Purchasing article examining the case of centralizing MRO purchases at Sara Lee. According to one source quoted in the article, "what this transformation has allowed us to do is view ourselves as one large organization as opposed to a collection of 50 or 60 smaller operations." And that's proof that if Sara Lee can centralize MRO Spend Management efforts -- which are fragmented by nature -- you can and should too before jumping to the outsourcing conclusion.

Jason Busch

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