Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I’ll be reviewing a whitepaper entitled “Creating A Procurement Shared Services Center” from CAPS Research.
I have to say that a lot of the whitepapers that I skim for this weekly column often skip essential definitions. If the reader knew everything about a topic, they probably wouldn’t be downloading a whitepaper on it. But many authors fail to realize this basic fact.
Fortunately, that’s not the case with this whitepaper.
It starts out with a simple explanation of a procurement shared services center, saying that “a procurement shared services center is created when the purchasing, procurement, and/or sourcing functions are consolidated into one center-led group that is responsible for purchasing/procurement activities throughout the business unit or corporation.”
Well, isn’t that the same as a centralized or center-led procurement structure?
The whitepaper says “no.” It offers this explanation to differentiate shared services procurement from other structures: “A shared services center…typically operates as a stand-alone business serving internal (and in some cases, external) customers who pay for services through a clearly defined chargeback formula…Typically, there is also greater emphasis on service and often service level agreements are put in place with internal customers. In some cases internal customers can decline to use the shared services center even though they are still subject to the chargeback formula, or in some cases, they can opt out of paying for services they decline to use.”
The whitepaper shares three case studies of companies such as Boeing and Northrop Grumman who have implemented a procurement shared services model. The whitepaper also addresses some of the bigger challenges of implementing a procurement shared services model, such as staffing and determining the fees applicable to internal customers (including 6 different approaches).
The whitepaper does point out that “[s]ome speculate that shared services centers are…a precursor to outsourcing.” Therefore, decisions to create a procurement shared services center are often made higher in the organization. As such, if you are faced to create a procurement shared services center, it behooves you to learn as much as you can about the topic to ensure your success (and continued employment).
This whitepaper is 15 pages long (a bit longer than my favorite whitepapers) and registration is required, but if the topic interests you, you can download it from CAPS’ Web site.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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