Is Outsourcing Really a Partnership?

Companies that are new to outsourcing, and even those highly experienced with it, like to say their relationship is a partnership.

I suppose it’s good for public consumption and public relations to consider all of the businesses and people a company works with as partners, and maybe in some way they really believe they are partners. But how often are they true collaborative and trusting partnerships in the Vested Outsourcing mold?

Sadly, not very often, I’d submit. When you beat up a ‘partner’ on pricing and performance demands it’s not really a partnership. It’s not a partnership if you don’t behave as partners.

One recent deal out of the IT space brings this disconnect between word and action to mind.

About a dozen 3PLs were bidding on a recent outsourcing contract with a large firm – I’m keeping the companies anonymous – but some of the post-mortem comments from the logistics company that eventually won the outsourcing contract are telling.

The negotiations were handled by a corporate team “with no connectivity to the business – they just wanted the best numbers,” this person tells me.

“In the end, we were able to find the ‘middle ground’ of price and strategy,” he/she continues, “But it didn’t start that way and throughout the process, it was communicated several times that we were on the cusp of losing the deal.

“There was no strategic planning and partnering up front, with the customer and the strategic partner sitting down to work together to deliver the best results.”

The last point makes me wonder how the deal got done at all, and how successful over the long-term it will be. It sounds like finding that “middle ground” was a really strenuous and stressful exercise.

The Vested Outsourcing approach and its Five Rules would create a firmer foundation from the start and a healthier, more cooperative, less stressful negotiation and operation atmosphere.

For instance this deal does not appear to be very much in the What’s in it for We? mold. Apparently it doesn’t feature mutual agreement on clearly defined and measurable outcomes (Rule 3) or a governance structure based on insight, not merely oversight (Rule 5).

The deal was very much like a traditional RFQ, I’m told. “The only think I can think of that was different was the fact that there wasn’t an internet auction pitting the contestants against each other to drive the lowest price possible as a last step.”

Ouch! And that’s from the winning bidder!

I say this all the time, but it bears repeating: Any Vested Outsourcing relationship – indeed most any relationship – flourishes best in a culture in which participants work together to ensure their mutual success. In essence, Vested Outsourcing buys desired outcomes, not individual transactions (Rule 1). Ideally, the service provider is paid based on its ability to achieve mutually agreed desired outcomes.

Well, the logistics company did get a multi-year deal, but don’t give the outsource company any ideas about internet auctions!

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