Vast forests of digital trees have been sacrificed to the topic of sourcing. While the incessant stream of white papers, articles, blogs, tweets and posts we’re bombarded with are certainly helpful, don’t they all start sounding the same after a while?
We often hear stories of business relationships that appeared strong suddenly turning sour. These relationships may even have existed for some time. So what is going on? It is likely acts of opportunism.
Another rainy trip up north, I thought to myself, turning on the windshield wipers. A recent phone call from Anne, the head of global purchasing, requesting my participation in reviewing some ideas to build stronger partnerships with their inside-outsourcing service providers (IOSPs), was the reason for the trip. Over my forty years as an IOSP, I’d become very cynical and prejudicial towards purchasing departments. As an IOSP to the auto industry, I’d witnessed countless purchasing initiatives resulting in bankrupting IOSPs due to a complete lack of foresight.
The tricky question that most if not all companies face on a constant basis is how to get their suppliers fully engaged and committed to – and even be instrumental in driving – innovation.
While the importance of innovation is a given that dates back more than 50 years to the teachings of Peter Drucker in The Practice of Management (1954), it has only been fairly recently that academics and organisations have been studying how to make innovation go from idea to reality. John W. Henke Jr. and Chun Zhang are two such academics.
Jean Tirole, the French professor of economics who recently received the Nobel Prize, is one of the most influential modern economists for his extensive theories and rigorous mathematic analysis of strategic behaviour and information economics in what is known as “Industrial Organisation” (IO).
As part of his research, he studied firms and markets where a firm had “power” to dominate the market and perhaps abuse that power.
If you’ve been in the outsource industry for more than five minutes you probably know that buyer-seller relationships are, well, complicated. And just when you think you have the collaboration thing nailed, more complications can ensue.
It is likely that no other subject gets as much attention when two companies are entering, or extending, their outsourcing business relationship as the effort to come up with a fair pricing structure. Money is money after all, and money talks. You know the drill by now: the conventional procurement process pits buyers and sellers on opposite sides of the table – and there’s no way around it, right? Wrong!