Now that we’ve completed three parts, you are well aware that you are understaffed and that you need to do something about it. You’re also aware that you may need to, or want to, outsource your category, project, or staff augmentation requirements. And, after our last post, you know that you better make sure that the category or project passes the sniff test before you ship it out.
Identifying a category or project that will help, and then identifying a company or resource that can do the job, is a good start, but if the outsourcing is going to work, it probably has to be vested. So before you check off outsourcing as a valid option for consideration, make sure it meets the following five requirements for a vested outsourcing arrangement.
- Outcome Focussed
A vested outsourcing arrangement is outcome-based, not transaction based. If the project is not focussed on an outcome, such as cost reduction, value add creation, etc., and is merely focussed on transactional invoice processing, it’s not a good candidate.
- What Focussed
A vested outsourcing arrangement can define the outcome irrespective of the how.
The outcome can not only be clearly defined, but can be objectively measured against a well-defined scale.
The measurable objective can be used as a foundation for performance incentives to incentivize the provider to perform better.
- Joint-Governance Friendly
The category or project lends itself to insight based governance, where you work with the supplier to overcome challenges and obtain better performance.
If the potential category or project checks all of these boxes, then outsourcing is a very viable alternative. But is it your best one? At this point it all comes down to what your insourcing option is.
So how do you make your final decision? We’ll address that in Part V, our conclusion to this series.