Balancing internal & external service provision – a recipe for procurement success (part 1)

We’ve got another newly published Spend Matters Research Paper to tell you about this week - “How to balance internal and external service provision – key decisions for procurement professionals”.

It’s available to download here, but before we get into the meat of it, just a few words about Achilles, who have sponsored this paper (although as always, sponsors don’t get to dictate the content!)

Achilles, as we’ve said before, is an enigma. Everybody has heard of them, not so many understand exactly what they do, and even fewer know quite how international they are or the breadth of their work. They’re in the Supplier Information Management field, but while there are many firms offering tools to help capture, verify and manage your supplier data, Achilles are pretty much unique in their emphasis on both the technology and in having real, local, on the ground presence all over the world – 23 offices to be precise.

So when you need that interesting supplier checking out in Santiago or Slovakia, Hong Kong or Houston, and they’re not answering their telephones or emails, Achilles can, if necessary, go round and visit the factory and check out that it isn’t just a mailing address in a disused car lot. Now they obviously don’t spend all their time doing that, but the option is there if needed.

The other unusual aspect to their business model is the way Achilles have worked with industry-wide groups of firms to build supplier information and related platforms for that particular industry (such as oil & gas or utilities). They also work for individual firms, and last year for instance started an arrangement whereby they are running the information gathering and qualification process for all the suppliers to one of the world’s largest oil companies.

Anyway, our paper does relate in part to the Achilles business, but it makes what we feel are some important broader points as well.  Some of you may remember our series about procurement outsourcing last year (see here and here), and our slightly convoluted analogy about the CPO / Procurement Leader of today being Lady Gaga rather than Mick Jagger.  What we meant was that, to get the best results these days, the CPO needs to manage a whole range of resources, some employed but many who are external to their organisation in some sense. It’s not just the tight team of internally employed staff that matters any more.

Well, that’s the theme we explore more fully in the first part of this paper – how CPOs can work out which elements of their work can best be “outsourced” (provided by external resource) and which should be delivered by their internal staff. We really do think this is a key requirement now, so we’ve thought about how to approach it and what some of the key issues might be.

Then in the second part of the paper, we look at why Supplier Information Management is a prime candidate for involving a third party to assist the procurement function. In a sense, part 2 explains why Achilles have been so successful – so you may not be surprised to hear that there are some good specific reasons why external provision in this field works so well.

Anyway, we’ll look at both part 1 and part 2 in more detail over the next few days, but in the meantime, please do download the paper (free on registration) here. 

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