Cross-Functionally Manage and Govern External Relationships – 10 Services Procurement Secrets (No. 5)

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Within both direct materials procurement as well as large IT vendor relationships, program governance, management and orchestration go hand-in-hand with overall vendor performance management, and ultimately, the outcomes one can achieve with the contribution of third parties. Yet in the realm of services procurement today, the ability to cross-functionally manage and govern large external relationships consistently and effectively is a skill that procurement has all too often abdicated to others (e.g., MSPs) and/or not entirely embraced internally.

Spend Matters research suggests that there is almost never a common third-party governance structure that extends across all key contingent workforce types: consulting, MSPs, BPOs, staffing, etc. This presents a significant opportunity for procurement organizations. With governance comes the basis of not only improving current vendor performance (and managing costs) but broader supplier development activities as well.

Many of the best innovations in manufacturing come from the supply chain. These can be boring while generating great savings (e.g., moving to vendor-led “pull” models with real-time sensing of inventory to minimize working capital for both partners) or truly sexy (supplier innovation in product design or packaging or even the use of different underlying materials or components).

Services procurement teams can learn from the advantages of supply chain governance and partnership – and should. The competitive advantages it can bring are significant indeed.

This analysis is based on the Spend Matters research study, Applying Supply Chain Rigor to Contingent Workforce Management, which is available for limited period of time for free download, via the previous link, in the Spend Matters research library. This post is based on content from the broader study and above-linked research paper.

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