Unpacking Sourcing Business Models: 21st Century Solutions for Sourcing Services

Sourcing Business Models Purpose and Background

The organizations and authors have teamed to drive awareness and clarity on how Sourcing Business Models can help private and public procurement professionals improve their sourcing effectiveness by using the most appropriate Sourcing Business Model for their sourcing situation.

The original white paper, published in 2012, centered on applying Sourcing Business Model theory to outsourced services.

This edition expands that thinking and asserts that Sourcing Business Model theory can be applied to all types of sourcing initiatives.

This white paper has five primary purposes:

1. Establishes that sourcing is a continuum. In this section, we highlight Dr. Oliver E. Williamson’s Nobel Prize-winning concepts and challenge organizations to consider a “hybrid” approach for sourcing more complex initiatives.
2. Shares a high-level overview of the various Sourcing Business Models, including traditional transaction-based models and more sophisticated output and outcome-based models. In addition to the overview, we explore the pros and cons of each model. We also examine how Sourcing Business Models can be applied in a “Shared Services” environment.
3. Provides guidance for determining the appropriate Sourcing Business Model based on a set of common business attributes.
4. Illustrates real examples of how organizations are applying each Sourcing Business Model in action.
5. Challenges procurement professionals to embrace Sourcing Business Model theory, encouraging the acceptance and adoption of alternative models purposely designed to create value and drive innovation with suppliers.

The paper is divided into sections that address the five focus areas. Enjoy the read – and share with your colleagues, management, suppliers, and customers to help expand their learning of strategic sourcing in the new economy.