21 June 2007 | Paul Snell
Premier Conference coverage
Purchasers have been urged to ensure they have baselines in place ahead of outsourcing deals to measure the success of providers.
Jim Robinson, procurement director for shared services at BAE Systems, told delegates: "You need to have a regular and structured performance review process, otherwise the process will be so new you will trip up."
BAE outsource about £200 million of indirect spend to business process outsourcing company Xchanging, from a total purchasing spend of approximately £1.2 billion. Robinson said the deal had contributed £18 million of gross savings per year since 2001. He added it was incorrect to think outsourcing could mean disowning particular spend areas. "Don't assume you can let go, business process outsourcing needs to be managed."
He said outsourcing procurement was often about the extra expertise a third party could offer. For example, he said, Xchanging could employ a travel manager with a higher salary and 15-20 years' experience to manage this spend area.
"We never would have invested in their level of experience," he admitted.
He added that acquiring that kind of expertise would take too long and employing a consultancy to do the work would not be sustainable.
For more coverage on the Premier Conference see:
- CIPS deputy CEO Keith Trower was this month elected chairman of the European Council of Purchasing & Supply. He succeeds Soeren Vammen.