When anyone asks me to recommend the most knowledgeable supply management experts, Sarah Pfaff always makes my list. A long-time consultant to the world’s leading companies, Sarah now heads Ariant Consulting Group (www.ariant.com), which specializes in strategic sourcing, procurement transformatino, and outsourcing strategy.

So when Supply Excellence readers began asking for tips on outsourcing advice, I was quick to ask Sarah to contribute her thoughts. In true form, Sarah offers some tough on what it takes to effectively manage outsourcing relationships. Read her recommendations below:

After months of negotiations, a client we’ve been working with finally picked an Offshore supplier for IT services, worked through, signed the contract and kicked off the implementation. The strategic sourcing process we went through to get to this point was fraught with many difficult and emotional moments and we had to deal with the typical issues of strong prejudices and resistance to Outsourcing/Offshoring along the way.

We worked diligently on change management every day, and there were even some people who truly did come around to believing in Offshoring. But when the contract was signed, there were still just as many people who had negative attitudes about Outsourcing/Offshoring as there were in the beginning.

This raises a question in my mind: What should a company be doing to make sure an Offshore Outsourcing Relationship succeeds – especially since there are a lot of people standing around hoping it doesn’t?

What frustrates me is the naïve belief that all that’s needed to manage Offshored Outsourcing is: 1) good SLA’s; 2) an account manager from the provider; 3) escalation procedures and 4) account review meetings.

The fundamental problem with this thinking is that it’s unidirectional, focused on managing the Provider, who already has a vested interest in making it a success. Instead, we should be focused on managing the function, and maybe in particular, the people who want it to fail.

I think the answer is a new discipline called Outsourcing Relationship Management where the focus is multidirectional and comprehensive.

Think about it, we’re talking services, not materials. With services we blame the provider for “not getting it right” then we repatriate. But how did we transition those services in the first place?

Usually our processes are not well documented, to say the least. Then when we outsource and/or offshore we often try to improve these processes and decide to let the Provider learn them as they go. Then we’re willing to go live without using the same rigorous QA processes for Services as we use for direct materials. Isn’t all this just asking for problems?

In other words – we expect to put in effort in order to bring on a new supplier for materials – we certainly don’t expect to “toss our requirements over the wall and walk away.”

And our management of our own organization and the supplier doesn’t end once we take first delivery. We’ve got to treat Services the same way. It takes effort to Outsource services and even more effort to Offshore them.

But, unfortunately Outsourcing Relationship Management is simply a new skill for most corporations. Maybe we need new curriculums to train managers in Outsourcing Relationship Management. They could include the traditional vendor management, governance and SLA management in an Outsourcing context, but also include how to facilitate process changes and reorganizations to accommodate Outsourcing. It’s my opinion, but we just can’t walk away and hope that Outsourcing will work – and we shouldn’t always blame the Provider.

Sage advice, Sarah. Even if it may be tough for some readers to hear. I hope you’ll come back and share more insights on outsourcing and strategic sourcing strategy.

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