11 May 2006 | Anusha Bradley
Buyers need to carry out better planning and post-contract management to prevent outsourcing deals collapsing, according to outsourcing advisory firm Orbys.
In a report, Managing Outsourcing for Maximum Value
, Orbys found nearly a quarter of the UK's biggest firms have brought an outsourced function back in-house after failed expectations.
According to interviews with 82 manufacturing, financial services and retail firms with a UK presence - including Kellogg's, Selfridges, Dixons, Boots and Citibank - 43 per cent said their supplier had failed to meet expectations and 23 per cent have brought work back into their own business as a result.
Mark Sukiennik, director of Orbys and a former procurement professional, said: "Most organisations don't do sufficient work at the planning and strategy stage to identify the benefits or problems outsourcing can deliver."
Simon Lindley, Orbys principal consultant, added: "Traditionally procurement focuses on the procurement process rather than the planning and post-contract management, which is where real benefits and value can be identified."
He said during the life of a contract, purchasers need to focus not only on judging their supplier against agreed targets but also compare the service they get with what is available on the market in terms of price and technology.
The report follows a study by PA Consulting (News, 27 April) which found many clients do not carry out due diligence on potential suppliers and underestimate the effort involved in managing an outsourced supplier.