Procurement Fighting the Good Fight: Benefits Sourcing and HR Complacency (Part 3)

Please click here for Part 1 and Part 2 of this post. This content is based on the research, analysis and opinions contained in the following Spend Matters Perspective: Human Resources & Sourcing Turf Wars -- HR Departments Lose their Prescription for Sourcing Immunity.

If we were to handicap a losing team in organizations when it comes to getting in the way of procurement outcomes that are better for both shareholders and employees, it would be HR. When HR stands up on the podium and attempts to fight a turf war for continued ownership of the sourcing of various benefits programs, it's the equivalent of labor leaders forcing a worker's strike at a plant when non-union labor is paid as much or more across the street in a different facility.

The sad part about this defense is that employees are caught in the middle. As we note in our analysis, employees are focused on the benefits being provided by their HR departments and how much they cost. And that picture hasn't been getting prettier of late. There's been a lot of cost shifting (from employer to employee), and that's about it. Better procurement, in contrast, is not about shifting costs. Rather, it's about creating value, because contrary to popular belief, strategic sourcing is not a zero sum game.

Sourcing optimization tools, aggregated contracts, frame agreements, group purchasing, and other tools all present potentially game-changing options to HR leaders. We're talking about solutions based on new optimization technologies that electronically solicit, collect and replicate traditional face-to-face negotiated proposals. Anti-procurement bigots take note: we are not talking about yesterday's reverse auctions!

Today's solutions allow HR leadership to build and optimize unlimited numbers of potential award scenarios. They are decision support tools. Not only do these tools support more effective and collaborative negotiations with potential suppliers, but they also allow their users to challenge organizational constraints (self-imposed limits) and build cases for change, fully supported with all the underlying data. Simply put, these solutions allow HR professionals to perform at a higher level and more cost effectively source HR benefits. The evidence is in and it can no longer be ignored. Best practices have been defined and savings results are a matter of record.

If you're looking for our further diagnosis of the suffering employee patient at the benefits hands of past HR procurement practices, download the Spend Matters Perspective: Human Resources & Sourcing Turf Wars -- HR Departments Lose their Prescription for Sourcing Immunity. And stay tuned for our next paper on the topic, which will explore, in greater detail, prescription benefits.

- Jason Busch

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