Early supplier involvement crucial to outsourcing

11 January 2006
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11 January 2006 | Anusha Bradley

"Cumbersome" traditional procurement processes used to strike outsourcing deals put successful contract delivery at risk, according to suppliers.

That is the conclusion of the 10 outsourced service suppliers that attended a session organised by outsourcing advisory firm Alsbridge.

It showed that suppliers believe traditional procurement processes - often advocated by outsourcing suppliers themselves - hinder the relationship between buyer and supplier, and that early supplier involvement leads to more innovative outsourcing.

Howard Spode, principal consultant at Alsbridge, told SM outsourcing deals could not be treated as simple commodities because they are hugely complex. They require constant and open communication between all parties to ensure all were getting the best deal, he said.

Spode added that buyers and their advisers often designed the outsourcing solution themselves then took it to market "to get the best price".

"They are missing out on the wealth of suppliers' knowledge. There needs to be meaningful engagement to shape a solution," he said.

More than 60 UK outsourcing customers say their existing contracts have failed to deliver the expected results, according to research published last month by law firm Denton Wilde Sapte.

And 20 per cent of outsourcing relationships fail in the first two years, while half break down within five years, according to research firm Dun & Bradstreet.

SMjan2006

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