Market conditions not the only outsourcing driver, buyers warned

26 April 2012

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26 April 2012 | Paul Snell

Current market conditions are not the only factor buyers need to consider when deciding whether or not to outsource.

This was the view of Julien Bouillot, global sourcing and procurement manager – EMEA indirect and capital at Bausch + Lomb, speaking as part of a panel discussion at the ProcureCon Indirect conference yesterday in London.

“Perhaps outsourcing is a viable reaction to current market economics, but it does not suffice,” he said. “I think you need to have a certain number of enablers to allow you to take advantage of it. That starts with leadership sponsorship, you need to make sure your company is behind you to drive this to successful completion. You need to make sure that you have processes, my experience being we do sometimes get lazy and lack focus and place responsibilities on our suppliers, forgetting about our own. And if you don’t have strong processes, regardless of market economics you will not be able to take advantage of successful outsourcing.”

Fellow panelist Felix Schoenemann, procurement director, global indirect materials and services at FrieslandCampina, said the current economy did give purchasing an opportunity. “I think it is a viable reaction to outsource, simply because the current market dynamics come with a sense of insecurity and that gives us a unique opportunity in procurement to leverage and put together attractive business cases in this area,” he said.

But Bouillot argued outsourcing was not a quick fix. “You have to have a long-term strategy and the organisation has to be behind this at the highest level,” he said. “The second thing is you have to have some resources - either people or capital - because it will take money to save money. An outsourcing project does not stop at the contract, it is a lot more complex, some of these projects take 12 to 18 months to be implemented. You have to make sure you have the resources to bring them to successful implementation.”

Ken Vanhoegaerden, director of sourcing at Chr. Hansen, argued that the outsourcing of direct and indirect services are often treated differently. “I think there is a big difference between outsourcing on the direct or indirect. Very often on the direct side you get into a close relationship with suppliers talking about joint investments, category planning, tight dialogue on how to use them. While on the indirect side, it is still very much focused on KPIs and performance management and we don’t go the step further, purely getting the performance we can find.”

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