Inside Supply Management Magazine

Making Outsourcing a Strategy

May 17, 2016

Insourcing & Outsourcing: Understanding Your Organization’s Core Competencies

ISM2016 session on Monday, May 16

Presenter: Lorna Pruitt, senior manager, procurement, for Coca-Cola

Outsourcing can be a way to enable your company’s growth and minimize risk, Pruitt says. It also can be a way to gain expertise and capacity.

Key takeaways concerning an outsourcing decision:

Don’t proceed without a full understanding of your company’s core competencies. Know where your areas of expertise are.

Don’t underestimate the importance of having a clear aligned-to strategy. Make sure you have executive support/sponsorship, cross-functional teams and a robust category strategy.

Don’t overlook the cost of ownership. Understand why you are outsourcing (such as gaining expertise). Know where the funding for outsourcing is coming from.

Don’t agree to poorly-crafted commercial or business terms. Make sure your contracts have solid joint-development agreements and give you first right-of-refusal and exclusivity to maintain competitive advantage.

Don’t minimize the importance of the human factor and tradition. Employees take pride in their jobs. Know that outsourcing can create an emotional environment in which employees can feel nostalgic about their companies, among other feelings.

Key quote: “Trust the experts and avoid micromanaging.”

ISM2016 is May 15-18 in Indianapolis.