New Spend Matters Research: Human Resources Loses Its Prescription for Sourcing Immunity

This post was cross-posted from Healthcare Matters.

Unless the law expressly prohibits it (e.g. taxes), should most every non-contracted area of spend be in the strategic sourcing professional's scope?

The transformation of the purchasing function from a passive, administrative process to a proactive, strategic and boundary-spanning function has been ongoing for the better part of decade. Whether the "blame" rests with our general economic malaise or customer demand just isn't what it used to be, organizations that have adopted a more strategic orientation to their procurement function have been handsomely rewarded. As a result, the strategic sourcing footprint has continued to grow.

But not without a lot of anxiety.

Predictably, departments that had traditionally managed their own supplier selection processes pushed back hard. For example, legal, HR and accounting departments never envisioned "their spend" as sourceable. They didn't like the idea of outsiders entering the mix of their long-held relationships. Having their spend reduced to some form of competitive bid or rationalization process was unthinkable to them and according to the experts, their resistance continues to cost their employers hundreds of billions.

The success of strategic sourcing and the newer best of breed optimization-based solutions continue to redefine such traditional organizational views. The newest tools not only definitively answer questions around what should be in-sourced versus outsourced (e.g. "make versus buy"), but they challenge executive leadership to revisit their ideas around what is operationally core.

Remarkably, the turf wars between sourcing and human resource departments persist to this day. Despite overwhelming evidence that spend categories like prescription benefits, dental & vision, relocation services, life & disability insurance and employee safety solutions all benefit from established best sourcing practices, many public and private sector human resource departments still won't acknowledge it.

Spend Matters, Healthcare Matters, and Allianza Partners have collaborated on a series of papers that will reveal dramatic opportunities in the strategic sourcing of these fringe benefits. Indeed, there are a number of "disruptive angles" that have emerged and we're going to take a look at several of them.

This series is entitled: HR & Sourcing Turf Wars. Our first paper in the series is now available. You may click here to download (Note: Spend Matters PRO registration required).

--Tom Finn

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