Growing the Market Pie: Expanding the Definition of Procurement BPO (Part 2)

Please click here for the first post in this series.

I previously offered an opinion on why (and how) we should expand the definition of procurement BPO to encompass the full range of outsourced and managed services that a range of technology providers, consultants and yes, BPOs, are currently delivering to procurement organizations. Looking forward, we increasingly expect that procurement organizations will look at BPO as a continuum of managed services that will serve, in very specific ways, as a default option for what is not deemed to be an internal competence. In certain cases, companies will not need to make a conscious decision to "outsource" procurement in the future (except for big bangs). They'll simply get the results and outcomes they signed up for from their solution providers.

This approach will not necessarily be labeled by procurement as BPO/outsourcing/managed services. It'll simply be seen as working with different partners in new (and expanded ways) to deliver specified outcomes. In fact, in the broader procurement and supply chain sector, this type of thinking and services delivery is nothing new. Consider the roles, parallels and examples across procurement and logistics where managed services are embedded at the very core of how suppliers deliver value outside of just providing a service, warm body or widget. Here are just a few examples that I see as BPO in this broader context:

  • Metals distribution (including paying a premium to distributors to perform value added services, hold pricing for longer periods, etc.)
  • VMI/JIT programs with suppliers and MRO distributors
  • MSPs in services procurement (not referred to as BPOs, but they are)
  • EHS/HSE for MSDS (too many acronyms!) for materials and substance level traceability and documentation
  • 3PLs: not called a "BPO" but that, again, is precisely what these providers offer, whether or not they own the infrastructure
  • Print managers/print brokers/outsourcers

With these broader examples, framework and understanding, it seems procurement and supply chain BPO is already around us already: we just don't call it that. What do you think?

- Jason Busch

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