2010 is here and executives will once again be evaluating ways to improve the bottom-line through processes that can help a company create efficiencies. The creation of a sourcing strategy may be one such process that may help your company improve the bottom-line.
However, creating a sourcing strategy is paramount to making a successful sourcing decision. You may wish to take an inventory of in-house skills to determine what activities to outsource and what to keep in-house. You may also need to evaluate what makes for a right-sourcing decision based on short-term and long-term company objectives.

How to define your sourcing strategy?
 
First understand the various sourcing models that are available. Do you want to offshore to a low-cost country or to a near-shore location? Do you want a high-level of management oversight or do you want a low-level of management oversight?

Shared services may be the least impactful sourcing decision made by your company. In shared services, you may have complete control over the location and managing the offshore/nearshore location. This will require management from your end and therefore you will need to make sure you have adequate resources to manage the shared services relationship.
 
The direct opposite of shared services is the complete outsourcing of your activities to a third party that resides offshore or nearshore. In this case, companies would have the least amount of control and oversight. This may not require much management oversight but you will also need to rely on processes to ensure you get quality work delivered in a timely manner.

Identify the best scenario for your company and evaluate the cost, benefits and risks for each scenario.
Next select the providers you want to evaluate and understand their costs, skills, and how your company may benefit from a sourcing relationship with each.  

Then, negotiate the best possible contract with the vendor of your choice. Be sure to be all-inclusive in terms of your expectations of deliverables, communication processes, key people identified, etc. etc. Document everything that is agreed to, to make sure that both parties eliminate assumptions.

Finally, prepare for transition and change management within your organization. This is an essential step where every stakeholder must be convinced that the company’s sourcing decision is best for the entire organization. To ensure stakeholder buy-in, be sure to have regular conversations around process, short-term goals and long-term objectives.

Once the transition is complete, ensure that processes are followed and key personnel continue to monitor the performance of the outsourced provider. Remember, a sourcing decision must be a strategic decision and not something that should be done simply to manage short-term costs. Therefore ongoing evaluation of the souring model, process, and impact to the bottom-line is imperative.

Working with a sourcing expert may be important when you realize you may need a sourcing strategy. Contact us to see if we may be able to help create, implement, and manage your sourcing decisions for you.