Presentation given at the 2011 Shared Services & Outsourcing Week in Orlando, FL. Outlines how to provide Knowledge Based Services from your Offshore Procurement Shared Services Center.

1. Beyond the Transaction:
Enabling Knowledge Based Services in your Procurement
Captive
Philip Ideson
Procurement & outsourcing experience as a client and
provider across multiple industries. Lived and worked in UK,
US & India.
Key Points
• Background: Offshore Shared Services Procurement Office
• Approach: Identifying Knowledge Based Processes
• Enablement & Engagement: Building Offshore Capabilities
• Creating Value: Knowledge Based Services Examples
• Capture the Benefit: Conditioning Home Country Colleagues

2. Quick Poll: ABOUT YOU
Who has offshored part of their
1 procurement function ?
Captive Shared Service or
2 Outsourced?
Do they perform any knowledge
3 based services?

3. OUR PROCUREMENT SHARED SERVICES JOURNEY
Initial Vision: Offshore team to provide tactical procurement activities
5 Years In: 170 FTE’s across multiple verticals
We then challenged ourselves:
“Move beyond labor arbitrage and create value for our home
office through the provision of knowledge based services”

4. Approach: WORK FLOW PLATFORMS
“Work flow platforms are enabling us to
do for the service industry what Henry
Ford did for manufacturing.
We are taking apart each task and
sending it around to whomever can do it
the best, and because we are doing it in
a virtual environment, people need not
be physically adjacent to each other, and
then we are reassembling the pieces
back at headquarters…24/7/365.”
- Thomas Friedman; The World is Flat

5. We plotted the process steps for every job type based on the complexity and the
strategic nature of the process
We then allocated each process step to either our home office colleagues or an analyst
in our offshore shared service center, and rebuilt the process flow and R&R’s

6. Approach: FILLING THE GAPS
Filling the Gaps
We identified gaps in the capabilities of our resource
constrained home office procurement teams

7. Approach: LEVERAGING DATA
We considered how we could leverage the
masses of data we accumulated during our
transactional activities

8. We identified three key areas where we could
create value through knowledge based services:
1. Strategic Sourcing (support Direct & Indirect spend categories)
2. Analytics (market intelligence, cost modeling, negotiation support)
3. Category Management (low value, “ignored” categories)

9. To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent 3. Governance 5. Structure
2. Performance 4. Transitions 6. Branding

10. Pilot: PHONE-A-FRIEND
We identified an internal client
and advocate who would help
build and pilot new knowledge
based services

11. Pilot: BUILD Route 2: Built it COME
Enablement AND THEY WILL and they will come
While for other activities, clients were
not able to visualize the possibilities, so
we built services and then demonstrated
the value they could create

12. Example: BUYER/CAPTIVE R&R they
Enablement Route 2: Built it andSPLIT will come
For our Commodity Buyer’s, we split all roles
and responsibilities between the home office 2. Sourcing
Buyer and our Captive Team Regional Commodity Buyer Activities
Supplier Resourcing
Strategic Sourcing – Source Selection
1. Global Commodity Strategies Captive Purchasing Support Activities
Information Gathering
Regional Commodity Buyer Activities
Directed Supplier Purchases
Outsourcing Manufacturing
On-line bidding events
Make/Buy Participation
Populate RFQ
EST Cost Models & Targets
Recommend Source
Commodity Strategy Selection (auction or eRFQ)
3, Negotiations & Supply Base Performance
Captive Purchasing Support Activities
Category Info Gathering Regional Commodity Buyer Activities
Market Intelligence Non-Design Price Changes
Supplier contact database Supplier Resourcing
Populate RFQ Negotiate Service Price Ups
Supplier Charge back
Supplier Assessment
Governance
Supplier Management and Relations
Regional Commodity Buyer Activities
Captive Purchasing Support Activities
Supplier Legal Issues
Information Gathering
Budgeted Parts Reconciliation
On-line bidding events
Obsolescence Mgmt.
Info Gathering
Escalated Payment Issues
Manage Supplier Location Changes
Escalated Service Pricing Issues
Raw Material Surcharge analysis
Supplier Management and Relations
Populate RFQ
Productivity Negotiations
Captive Purchasing Support Activities
Warranty negotiations
Amortization Tracking
Performance Information Gathering

13. Example: SOURCING PROCESS
Enablement Route 2: Built it and they will come
We divided the work flows across the sourcing process between colleagues
in our home offices and our offshore captive center:
Value Creation Activities
Strategy & Needs Id ● RFQ Requirements ● RFQ Analysis ● Negotiation ● Implement ● Supplier Management
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 STEP 6 STEP 7
Identify Build Sourcing RFQ Supplier Evaluation, Implement Performance
Sourcing Strategy Preparation response negotiation Sourcing Management
Requirement and issuance collection & and sourcing
analysis award
Time Consuming Activities
Build & Issue RFQ ● RFQ Q&A ● RFQ Collection ● Negotiation Data Analysis ● Issue PO ● Track Performance

14. Example: COST ANALYTICS Our Captive took a lead role in
capturing, analyzing and
Analyzing cost breakdowns reporting intelligence
Cost elements (FOREX, Material, Labor, Markups)
Supplier costs for similar products & services
Gather market intelligence
Commodity prices, price trends, price forecasts)
OUTPUT:
“Should Cost” Models
Negotiation Support Reports

15. CAPTURE THE BENEFIT
Conditioning of home office colleagues
Cultural awareness
Understanding of captive shared services capabilities
Ability to reassemble work flow platforms

16. KEY TAKEAWAYS
Key Takeaways
Identify the processes you want to
target
Build the organizational foundation
that will enable you to make the leap
to knowledge based services
Pilot your services with an internal
advocate
Use early successes and advocates to facilitate growth
For maximum benefit, ensure your team members providing the
knowledge based services are fully integrated into your home office
teams

17. CONTINUE THE CONVERSATION
Continue the Conversation
pideson@aol.com
+1 734 634 8304
www.linkedin.com/pub/philip-
ideson/1/552/618

18. With Thanks: PHOTO CREDITS
Title Name URL
Thomas Friedman Charles Haynes http://www.flickr.com/photos/americanprogress/3077771442/sizes/m/in/photostream/
Euros Username 1suisse http://www.flickr.com/photos/1suisse/3752554593/sizes/l/in/photostream/
Mind the Gap Username limaocarjuliet http://www.flickr.com/photos/limaoscarjuliet/3305886294/sizes/l/in/photostream/
Fish & Chips Box Username livepine http://www.flickr.com/photos/livepine/4550549518/sizes/z/in/photostream/
With Thanks: OUR TEAM IN INDIA!