Friday’s group discussion on Vested Outsourcing led by University of Tennessee faculty member Kate Vitasek went very well. For anyone unfamiliar with her work, Kate literally wrote the book on Vested Outsourcing, a model that utilizes incentives to create more strategic relationships between buying organizations and their outsourcing vendors. So when she stepped up and volunteered to present some of her work and engage in discussions with the 14,000 members of the Strategic Sourcing & Procurement LinkedIn Group, I gladly took her up on the offer.

The underlying premise of Vested Outsourcing - that suppliers/individuals will play to the metrics they are incentivized under - is nothing new to any of us, right? After all, we’re in a field that values creating value rather than checking boxes of completed tasks. But how many of you can truly say you are, to quote Kate, “not paying for activities, we’re paying for results”?

If this paradigm shift resonates, buy the book. The University of Tennessee is also offering 3 day courses on the subject at several times this year.

Obviously, structuring incentives to drive results is a model that can apply to areas other than outsourcing. So, I’d like to hear the creative ways your organization has structured incentives for your suppliers. Any success stories, words of wisdom or tools you can share?

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.