Exploring On-Demand Purchased Service Solutions

Posted: 11/20/2018 - 01:04
The management of purchased services continues to lag relative to other categories of spend. And while the reasons are varied and debatable, virtually no one argues the availability of big savings opportunities. So what gives? No doubt, the decentralized nature of many purchased services confounds attempts to introduce more manageable processes. And we can’t overlook the “stiff arm” that procurement leaders often receive from stakeholders who treat certain categories of spend like organizational sacred cows. Especially in the higher preference categories of spend (e.g., marketing, legal or management consulting), the resistance to procurement-led structure can be formidable.  
 
Generalist Tools Don’t Cut It  
 
The generalist S2P tools have never proven to be a good fit for many categories of purchased services. It’s not to say that practitioners don’t routinely push the functional envelope of these systems, because they do. But struggling with experimental configurations of RFx software is not where the profession needs to be. On a practical level, when a purchased service doesn’t fit the workflows and templates used in everyday practice, things tend to not happen. Management typically follows a reactive plan, meaning there’s little activity until contract expirations are in play.  
 
No Market Context 
 
It’s not just a software configuration issue. The market insights required to drive effective category management are often absent, especially in the highest preferred areas of spend specifically mentioned above. But knowing that you don’t have the appropriate benchmarks (along with not necessarily knowing what you would do if you did) speaks to the need for packaged solutions. In fact, “category killer” solutions are emerging. They are typically delivered as-a-service, so they are IT-light. Not only are many of these solutions easy to adopt and integrate (little change management required), but they require little-to-no training to use.  
 
On-Demand Category Management 
 
Obviously, all purchased service categories are not created equal. Not surprisingly, however, the most successful, new, on-demand solutions share several characteristics: 
 
  • The companies are founded by category experts.
  • Their solutions typically target markets where supply exceeds demand and/or technology has eliminated quality concerns.
  • They all deliver a more structured, accountable procurement process with many going so far as to guarantee reduced costs and improved quality.  
And while the management of low preference services doesn’t carry the same level of interest (or emotional baggage), as more strategic categories, there is still much to be gained by considering on-demand solutions. In fact, successful category-specific approaches aren’t about shining a light on a problem. On the contrary, they shine a light on opportunities. Print solutions help marketing professionals get comfortable with the fact that supply-side print technologies have leveled supplier playing fields to a point where print can be bid competitively without quality concerns. And legal category solutions provide clients with an opportunity to finally sit down with outside counsel and have structured discussions based on relevant facts. This is a game changer. In both cases, the merits of a structured approach are indisputable.  
 
In markets where supply exceeds demand, or where technology has leveled supply-side playing fields, or where performance benchmarks are now available, the latest on-demand category management options should be aggressively explored. They provide procurement leadership and the stakeholders who have historically blocked their efforts to deliver structure with a way to collaboratively improve quality and reduce costs. If nothing else, they provide both parties with an objective way to quantify supplier relationship premiums and effectively address them when they don’t make sense.  
 
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About The Author

Sarah Scudder's picture

Sarah Scudder is President of Real Sourcing Network (RSN), a print e-sourcing tool software company. She has grit. She has spunk. Sarah is the youngest executive to ever serve on the board for the Print Services and Distribution Association (PSDA). She is the CEO and founder of the Young Innovators Group. Sarah leads the annual Young Innovators National Conference and co-hosts Career Conversations, a weekly podcast. She interviews entrepreneurs, business and community leaders. Sarah writes a monthly column for the Print Services (PS) Magazine and Print+Promo. Sarah is a winner of North Bay Business Journal’s Forty Under 40 award. She won the Print+Promo’s Trailblazer Under 40 award. Sarah won the Print Services & Distribution Association (PSDA)’s Member of the Year award.