Kate Vitasek

Vested outsourcing: a flexible framework for collaborative outsourcing

Purpose – Research and studies of successful, collaborative outsourcing relationships have uncovered commonalities that researchers codified into a methodology designed to structure aligned, innovative and cooperative outsourcing arrangements. This paper aims to describe a new methodology for establishing successful collaborative outsourcing relationships.Design/methodology/approach – The design is based on seven years of field research into successful strategic outsourcing agreements completed by the authors and additional colleagues.Findings – Research into successful collaborative outsourcing relationships has uncovered commonalities that researchers have identified as normative rules which, when followed, lead to aligned, innovative and cooperative relationships. This paper identifies five rules and ten elements that together form a flexible framework for implementing an effective outsourcing partnership. This approach is called “vested outsourcing” because the nature of most highly successful relatio...

Strategic sourcing business models

Purpose The purpose of this paper is to describe how seven sourcing models operate along a continuum depending on the complexity of the marketplace and the strategic needs of buyers and suppliers. Studies of business procurement and sourcing practices reveal that collaborative and holistic approaches will increase efficiencies and value in strategic outsourcing relationships. Design/methodology/approach The design is based on research and fieldwork from the University of Tennessee and vetted with the Sourcing Industry Group, the Center for Outsourcing Research and Education and the International Association for Contracts and Commercial Management. This work provided the basis and framework for the 2015 book, Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models in Modern Procurement. Findings Most organizations operate under conventional transaction-based models that are constrained by a formal, legally oriented, risk-averse and liability-based culture. There is growing awareness that transactional-based approaches do not always give each party the intended, or best, results. University of Tennessee research shows how organizations apply alternative output- and outcome-based approaches for complex contracts. That experience demonstrates that alternative Sourcing Business Models are viable approaches to the conventional transactional methods[1]. As senior leaders see positive results from carefully crafted collaborative agreements, momentum grows for both output- and outcome-based approaches. Practical implications Education on sourcing business models. Originality/value Collaborative outsourcing.

The Power of We

With a WIIFWe mindset and the Getting to We process in place, the companies profiled in this chapter have developed highly collaborative and sustainable business relationships. By embracing the WIIFWe philosophy, they formed a framework for collaborative and trusting relationships.

Considerations for Crossing the Continuum

You’ve done your homework. You’ve used the Business Model Mapping Toolkit and now have a preliminary understanding of which Sourcing Business Model is the most appropriate for your situation. But how do you take this information and turn it into action? In the past, you would have used a formal multistep strategic sourcing process. (Exhibit A1 in the appendix presents the most popular models.) But as we noted in chapter 1, existing models have many weaknesses, resulting in lower-than-expected performance.

Vested: A Brave New World

When we think of the great innovations that come our way, we might instinctively think of them as the product of a sudden brainstorm from an individual—a light bulb moment, if you will. But, in reality, good ideas can come from anywhere. Leading companies find that innovation is often produced over time with a lot of collective sweat equity. And that includes perspiring suppliers.

Maturity Meets Modality

Think of children, and the various levels of maturity they go through as they develop. Physical maturity allows children to crawl, then walk, then run. Mental maturity develops as children begin to process problems. Children start by figuring out how to get dressed and tie their shoes. As they develop, they learn to handle more complex problems, such as algebra and learning how to drive so they can get themselves to school. Cognitive maturity is the ability to relate cause and effect, understand societal rules, and see the potential consequences of your actions. Emotional maturity helps children deal with siblings and difficult peer group dynamics with grace.

Sourcing Is a Continuum

Sourcing has its roots in our collective past in commerce and trade. As individuals formed family clans, tribes, communities, and complex societies, individual members began to specialize. That led to a division of labor, improved skill and knowledge, and better workmanship. People with specialized skills traded with each other for goods and services they needed to survive. They did not try to be totally self-sufficient; they relied on each other’s talents and productivity and, as a result, lived better.

The 800-Pound Gorilla Has Left the Building

Julie—not her real name—came from humble beginnings in London. She put herself through vocational college and received a one-year criminaljustice specialist certificate. The degree came in handy when she landed a security job at a Fortune 100 company. Julie was excited when she was promoted to work in procurement— managing contract compliance for the firm’s security contracts. This was a big deal when you consider the firm had hundreds of locations throughout the world and virtually all security functions were outsourced to third-party security companies, such as Securitas, Brinks, and many smaller local firms.

Selecting the Right Sourcing Business Model For Your Situation

In chapters 4 to 7, we profiled seven distinct Sourcing Business Models. Which one is right for your situation? The answer is: “It depends.” You don’t need a sophisticated relationship to source paper clips. A straightforward transactional deal works just fine. Likewise, as Adrian Gonzalez points out in chapter 5, an organization shouldn’t rely on an electronic auction to find a third-party logistics service provider to provide

Investment-Based Sourcing Models

100 million of logistics support.