A sourcing strategy, outsourcing is the transferring of a process or function to an external provider

A sourcing strategy, outsourcing is the transferring of a process or function to an external provider

Organizations can outsource any workscope. Popular workscopes to outsource includes non-core competencies such as warehouse and logistics, facilities management, call center/customer support and IT as well as back office functions such as finance administration, claims processing, benefits management.

Contractual arrangement between two or more organizations for the provision of specific services where one organization (the buyer) is the client for services and another organization (the supplier) is the provider of the service.

A joint set of structures and processes that are implemented to ensure effective leadership and management, which enables an outsourcing agreement to achieve its joint objectives within the framework of agreed values.

Outline of guidelines and processes that enables continual monitoring and management of outsourcing arrangements to sustain value delivery between client and provider.

Formalized concept of the scope of an outsourcing arrangement and how it is structured and carried out. Organizations can use any of the seven sourcing business models to procure outsourced services.

A situation in which technical requirements are imposed on suppliers that are not necessary for the functionality of the product or the delivery of the service. Overspecification is usually caused by Junkyard Dogs.

PBLs typically use a Performance-Based Sourcing Business Model

A form of company credit card that allows goods and services to be procured. P-card purchases are usually made against existing contracts and pricing schedules. Buying organizations implement p-cards to help control spend as certain limitations and approvals can be configured for their use.

The payment authorized in a contract upon delivery of one or more units called for under the contract or upon completion of one or more distinct items of service called for thereunder.

An incentive that is tied to specific performance requirements. The desired performance is typically stated in terms of a quantitative SLA. The incentive fee can be fixed or variable, but always corresponds to specific, agreed upon targets. Performance incentives can be an effective way to encourage performance provided that the incentive is worth more than the effort to achieve it.

A decentralized communications model where peers are “mapped”. In a buyer-supplier relationship each have “peer roles” for joint accountability and problem solving. For example, a commercial manager for the buyer would have a commercial manager she would work directly with at the supplier. Roles are clearly delineated and do not overlap in order to avoid duplication of effort and/or micromanagement from the supplier. The buyer and supplier work to support each other where they “win together” and “lose together”. The concept greatly improves collaboration between a buyer and supplier. Also sometimes referred to as “2 in a Box” and “Reverse Bow Tie”.

Sometimes also referred to as procurement cards or a buying card

Provision in a contract that imposes a specified sum on the defaulting contracting party for a specified default. Penalty clauses are most often associated with Performance-Based agreements where a supplier gives the buyer a refund when they do not meet an SLA. Sometimes also referred to as service credits or malice payments.

Originally a U.S. Government program term primarily in the aerospace and defense sector, PBL describes the purchase of assets with a complete package of services and support as an integrated, affordable, performance package designed to optimize system readiness and meet performance goals for a weapon system through long-term support arrangements with clear lines of authority and responsibility. PBLs are designed to optimize system readiness and meet performance goals for a weapon system through long-term support arrangements with clear lines of authority and responsibility. They can be structured as a Vested model.

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