In the first of our installments on Procurement Business Services, we discussed how procurement must have a strong competency in managing itself as a services business, being an integrator and ‘assembler’ of external procurement services (including professional, content/information, and application services).
But before we explore how firms manage to do this, we should first discuss the “what” and “why” of Procurement Business Services (PBS). In terms of the “what,” some definitions are in order:
- Business Service: A business process that is designed and executed on behalf of multiple stakeholders (1). The resource (person, team, department, etc.) that performs this service may sit in a shared services organization, but could also be in the corporate center (e.g., centralized procurement function), or even in a business unit (which some call a Center of Excellence, or a “virtual shared service”). A PBS is merely business service that is procurement-related (i.e., helps manage supply).
- Shared Services or “Global Business Services” (GBS): An operating model used to aggregate, standardize, deliver, and continuously improve business services (usually non-core processes that were previously redundant and sub-optimal in the business units). Many use the term GBS to represent a more sophisticated approach to shared services that had previously been more transactionally/tactically implemented. PBS is really just a more advanced form of “center-led” procurement (we’ll talk more about this later).
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