© PSL Consulting Solutions Limited OUTSOURCING University of Portsmouth Hot Topic Event 18 October 2006 David Hewitt PSL Consulting Solutions Limited

© PSL Consulting Solutions Limited

OUTSOURCINGOUTSOURCING

University of Portsmouth Hot Topic Event18 October 2006

David Hewitt PSL Consulting Solutions Limited


ABOUT PSL ABOUT PSL CONSULTINGCONSULTING Experts in procurement we provide strategic, operational and category-related solutions and services to the purchasing and supply community in both private and public-sector organisations throughout the UK and elsewhere.


ABOUT PSL ABOUT PSL CONSULTINGCONSULTINGOUR SERVICES & SOLUTIONS INCLUDE:

• Health checks designed to unlock improvements in strategy or operations

• Category sourcing support for discrete projects or a broad strategic analysis

• Better buying - an added-value package for profit improvement

• Our active consultant model that builds effective relationships with internal customers

www.pslconsulting.co.uk


Join all nine dots with four straight lines…


2

13

4

The answer lies outside the box…


OUTSOURCINGOUTSOURCING

• Why do it?• The business model• The pros (and cons…)• Is there a role for Procurement?• Managing negotiations• Critical success factors


Cost

Time

BAUBAU

In-house process re-engineeringIn-house process re-engineering

OutsourceOutsource

WHY DO IT?WHY DO IT?


OPTIONSOPTIONS

• Spin-off in-house team or process to new stand alone business

• Spin-off to existing business• Spin-off into a joint venture• Manage back-office services via an

external consortium• Eliminate in-house team &

vendorise


THE BUSINESS MODELTHE BUSINESS MODEL

• We start with a doughnut:

• Then decide how we are going to eat it…


THE DOUGHNUTTHE DOUGHNUTCORE BUSINESS ACTIVITYAdmin support

Property & facilities

Manufacturing

Finance

Procurement

HR

Logistics & distribution

ICTTraining

Professional support services


THE ‘HANDS-THE ‘HANDS-ONON’ ’ MODELMODELThe G-force case study…

Hand the work to your outsource partner and under your design and output control let them manage it for you.


THE ‘HANDS-THE ‘HANDS-OFFOFF’ ’ MODELMODELThe R-wave case study…

The black-box approach. Let the outsource partner ‘bite off’ a bit of the business and get on with it for you.


PROsPROs

• Full cost visibility• Creates (opportunity for) higher-

level capacity in your business• Horses for courses• Leverage potential• Raises profile of procurement


CONsCONs

• Loss of ‘total’ control• Potential HR/CSR exposures• Inflexible contract management• Long-term compatibility with

partner


A ROLE FOR A ROLE FOR PROCUREMENT?PROCUREMENT?• Market knowledge• Supplier management• Communications• Managing the negotiations


MANAGING NEGOTIATIONSMANAGING NEGOTIATIONS

• Escalation process• Measurability• Customer interfaces• Open-book structure• Incentivisation

terms

• Management control• Change control• Service levels • KPIs• Quality• Billing


CRITICAL SUCCESS CRITICAL SUCCESS FACTORSFACTORS• Get the right contract• Understand all the costs• Don’t outsource skills that give

you competitive edge• Only outsource leveragable

activities• Enhance your procurement skills


ANY QUESTIONS?ANY QUESTIONS?

Documents

© PSL Consulting Solutions Limited OUTSOURCING University of Portsmouth Hot Topic Event 18 October 2006 David Hewitt PSL Consulting Solutions Limited