procurement bpo rfp for bpo provider outsourcing procurement

This post is part of a series discussing BPOs and Strategic Sourcing:

Over my last 5 posts, I reviewed the growing trend of outsourcing strategic sourcing to your BPO provider who handles your traditional transactional P2P.   And while I was a bit negative in discussing the concept and results of many of the existing providers, I don’t mean to imply that every onshore/offshore BPO provider is a bad choice.  I simply think that companies need to do a greater level of due diligence and become less focused on simple ROI calculators when trying to determine if and which BPO is a fit for them.   This final post in the series will hopefully present some other thinking and considerations that should take place as you evaluate your sourcing BPO options.

Here are some of the evaluation criteria and questions that you need to consider when you are selecting a BPO provider for Procurement:

  • Is the BPO model a hybrid model of offshore/onshore resources

  • What is the mix of resources of onshore vs. offshore?

  • How do the onshore resources manage the offshore resources?

  • What level of training is provided to each of the resources?
  • What is the turnover rate?

  • Of the onshore team?

  • Of the offshore team? 

  • Of the Jr./Sr. resources? 

  • Are they named resources or do they come from a pool?
  • Can you interview the resources?
  • Are the resources you interview the same resources that will stick with you through the life of the account, or will they be swapped out?
  • Do you have the ability to demand/request replacement resources?
  • What are the backgrounds of the Subject Matter Experts?

  • How long have they been doing sourcing/procurement? 

  • How long have they been employed with the BPO itself?

  • Will they be working on more than just my account?

  • If not, how many accounts do they work at once?

  • What is the category manager or SME’s role specifically?  
  • What is the quality control process of the work product coming back from the low-cost resources?
  • Have the resources that are assigned to your account worked on other accounts together?
  • How does the BPO provide a consistent on-boarding and culture and handle turnover?
  • Are they willing to provide a breakdown of hours worked on your account and allocations for the senior delivery team?
  • How do they communicate with your team/stakeholders?
  • How do they measure savings vs how do you measure savings? – get buy-in on this before you sign anything!
  • Test their acumen on a variety of categories.   

  • Make sure that the strategies used are not canned 3-bid and buy RFP mentality.

  • Look at work examples from both tactical and non-tactical categories.

  • What tools do they have at their disposal?  

  • Do you have access to the same tools? 

  • What happens if to the tools/data/knowledge if we terminate the relationship?

  • What databases or other content-pools do they have to pull from to support category specific knowledge?
  • How do they measure a successful supplier relationship (meaning your relationship with your suppliers)?

  • Do they only focus on the financial aspects of your relationships?

  • How do they share institutional knowledge with each other?

  • From your account?

  • From other clients?

  • And that’s just scratching the surface.   Also, here’s a pro-tip; you should be asking a lot of these questions in meetings/phone calls, not in canned RFP documents.  Make sure that the organization you select is compatible with your stakeholders.

    And lastly, most importantly, is outsourcing your strategic sourcing really the right thing to do at all? Many companies have found that it was a mistake, and have been trying to bring the resources back in-house which is much harder to do than giving it away.  Further, much better options exist out there, such as supplementing your existing capabilities with high-quality services.  They might not be as cheap on the surface, but the true impact (and financial benefit received in savings and finding the right suppliers) will far outweigh any differences in costs.

    Any other useful evaluation criteria come to mind?  If so, add them to the comments.

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    William Dorn

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