Vested Outsourcing
Do you want more focus on the result than the path to it? Do you want to pay only for results and not for transactions? Do you want to compete better because your partnership is about value-added solutions rather than activities? Do you want a win-win relationship rather than a win-lose relationship? Do you want stakeholders to have ownership and a focus to deliver results because of the jointly agreed desired outcome? If yes, then Vested Outsourcing is for your organisation.
Do you want more focus on the result than the path to it?
1. FOCUS ON OUTCOMES, NOT TRANSACTIONS
The emphasis is on aligning the supplier’s needs with the customer’s needs: an efficient and low-cost total solution. By aligning the desired outcomes of both parties, the supplier is paid based on the extent to which it achieves the desired outcomes.
2. FOCUS ON WHAT, NOT HOW
The outsourcing organisation specifies what it wants and not how it wants to achieve it. It transfers this responsibility to the supplier since the supplier is better at its own work than the outsourcing organisation. After all, this is why organisations outsource services.
3. AGREE CLEARLY DEFINED AND MEASURABLE OUTCOMES
Both the outsourcing organisation and the supplier should jointly define during the outsourcing process and during contract negotiations how they will measure the success of the relationship. By investing time in defining measurable outcomes in advance, you prevent either organisation from spending time or resources on measuring the wrong things. Based on the defined outcomes, the supplier can offer a solution, at a fixed price, that meets the expected level of performance. This moves risks from the outsourcing service to the supplier.
4. OPTIMISE PRICING MODEL REWARDS
When establishing the pricing model, it should be taken into account that risk and reward should be balanced for both organisations and that the agreement specifies that the supplier delivers solutions and not just activities. This means that if the supplier delivers more value than expected, it should be paid for it.
5. MANAGEMENT STRUCTURE SHOULD PROVIDE INSIGHT, NOT JUST SUPERVISION
It is not about managing the supplier but about managing the business with the supplier. This means that for the outsourcing organisation, it is about having insight into what the supplier is doing and not having to check if the supplier is doing it right.
Advantages of Vested Outsourcing
Application of Vested Outsourcing has a large number of advantages. We have listed the biggest advantages for you:
- An environment where continuous improvement is central. Partnerships and flexibility constantly create better, innovative solutions. Suppliers no longer ask what they can do for you but ask what we can do better together.
- Lower costs and greater stability through “we” thinking instead of traditional thinking where only own interests matter.
- Need for procurement reduces or disappears as a result of partnerships.
Similarities between Vested Outsourcing and Best Value Procurement (BVP) are that both focus on the supplier’s expertise, both think in terms of win-win and both place value over price. However, there are also differences. A key difference between Vested Outsourcing and BVP is that Vested focuses on the relationship with the supplier while BVP is about verifiable performance information on the basis of which outsourcing organisations select the supplier that realises most value at the lowest price. More information on BVP can be found here.