Companies 'should incentivise suppliers to deliver good service'

Businesses seeking to gain the greatest advantage from procurement outsourcing processes have been advised to implement a structure of incentives.

Simon Rutter, head of procurement at Thames Water, told Supply Management that its purchasing partnership with Efficio has delivered a range of advantages, such as the ability to access consultancy-level expertise easily.

However, he stated that the inclusion of commercial incentives for delivering a good deal as part of the contract has helped to create a close working relationship between the two partners.

"This way they're incentivised to do the best job while still keeping our stakeholders happy because we're carrying out quality assessments," he explained.

In December, Everest Group published research suggesting that the number of firms outsourcing their purchasing activities will rise by 20 per cent in 2012.

It was also predicted that outsourcing partnerships will be expanded into new areas of the supply chain, including order fulfilment, inventory management and logistics.

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Categories: Functional Practices