Praise for the First Edition of Vested Outsourcing
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1 Praise for the First Edition of Vested Outsourcing Dawn Tiura Evans, President and CEO, Sourcing Interests Group: Kate has hit the nail on the head. The rules while often spoken about have never been so clearly defined as they are here. The journey to a truly collaborative agreement is practically guaranteed if you follow the step-by-step process outlined in this great book. Tim Cummins, CEO, International Association for Contracting and Commercial Management : Vested Outsourcing offers a robust approach for developing high-performing strategic relationships. Tim McBride, Microsoft s General Manager Finance Operations and former Chief Procurement Officer: As the Chief Procurement Officer at Microsoft it was my job to help us adopt next generation outsourcing models and Vested Outsourcing has proven to be a successful tool in our toolkit. Todd Shire, Global Logistics Sourcing Strategy Manager, Intel : I predict the buzzword for the next decade will be incentives. Only when our incentives are aligned will we succeed with collaboration. Vested Outsourcing nails how to get collaboration right. Lauralee Martin, Chief Executive Officer Americas, Jones Lang LaSalle : We ve had tremendous success in applying Vested thinking with strategic clients; Vested Outsourcing gives us a systematic approach to apply the concepts more broadly. George Kimball, Senior Legal Counsel, HP : Vested Outsourcing offers mutual benefit, measures that benefit, and then builds pricing and allocates risk and responsibilities in ways that motivate both parties to achieve the common goal. Vincent Faramaz, Senior Manager Global Outsourcing, ebay : Vested Outsourcing takes this critical process to a new level. A refreshing perspective for both those who are seasoned as well as those who may be new to outsourcing. This book is a very well-organized combination of outsourcing thought leadership and a practical roadmap to making it happen. Lachlann Kane, Transportation Operations Manager, Apple Inc.: This is a must read for anybody thinking about outsourcing. Frank Casale, CEO, Outsourcing Institute : Vested Outsourcing is a game changing approach that will quickly become the new gold standard for advanced outsourcing relationships. It is a critical enabler for Outsourcing 2.0. Rhonda Lingefelter, Vice President Global Business Solutions, ModusLink Global Solutions : I have finally found the Holy Grail by which I will measure value in outsourcing agreements truly a breakthrough. Mike Maksin, Vice President Business Development, Hinduja Global Solutions : Kate Vitasek and her Vested team will lead a revolution never seen before in the outsourcing industry. Every organization can benefit by understanding and applying the principles presented in Vested Outsourcing.
2 Adrian Gonzalez, Logistics Viewpoint : I view Vested Outsourcing as a cutting edge approach to structuring and managing service provider-client relationships. Joe Andraski, former President and CEO, Voluntary Interindustry Commerce Solutions Association : I found Vested Outsourcing to be a very practical and relevant guide to collaborative relationships between the company that has outsourced and the service provider... Vested Outsourcing should be a must read for every organization engaged in outsourcing. Richard MacLaren, President, Unipart North America : Vested outsourcing is a game changing approach and will transform how you do and will do business. If you are looking for a long term outsource relationship/partnership then look no further as this book is a must read. Katherine O Reilly, Executive Director, Eye for Transport : The supply chain and 3PL management we work with are sold on Vested Outsourcing. The book of the same name has become a kind of Bible for best-of-breed companies, and this movement is truly taking the industry by storm. James Groton, Arbitrator, Mediator, and Dispute Systems Designer: As a lawyer who has spent his life having to examine the seamy underbelly of failed business relationships, I applaud Vested Outsourcing for teaching a process that will help the parties deal constructively with unexpected events and problems a given in today s business world. It is a masterpiece of common sense. Yemisi Bolumole, Assistant Professor, Department of Supply Chain Management, Michigan State University : Vested Outsourcing offers a refreshing and insightful executive approach to building collaborative business relationships that work. College students will appreciate that the authors share a light-hearted writing style which keeps the book from becoming pedantic while ensuring that the information is concisely presented. Hollye Moss, Associate Professor, Western Carolina University : I recommend this book to any outsourcing organization or service provider. It takes a new approach to the relationship, creating a win-win scenario. It is well-written, easy to read, and thought-provoking. It just may change the way companies do business. Dale Rogers, Professor of Logistics & SCM, Co-Director, Center for SCM, Rutgers Business School: Vested Outsourcing builds on solid principles such as game theory and other time-tested ideas. This book will serve as a reference for service purchasers as well as service buyers long after it is purchased. Vested Outsourcing organizes a way to develop a strong relationship between business partners. Brian Gibson, Professor, Auburn University : Vested Outsourcing transforms a complex, problem-ridden area for companies into an understandable, manageable topic.
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5 Five Rules That Will Transform Outsourcing Second Edition Kate Vitasek with Mike Ledyard and Karl Manrodt
6 VESTED OUTSOURCING Copyright Kate Vitasek, 2010, Softcover reprint of the hardcover 1st edition All rights reserved. First edition published in hardcover in 2010 by PALGRAVE MACMILLAN in the United States a division of St. Martin s Press LLC, 175 Fifth Avenue, New York, NY Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN DOI / ISBN (ebook) Library of Congress Cataloging-in-Publication Data Vitasek, Kate. Vested outsourcing : five rules that will transform outsourcing / Kate Vitasek with Mike Ledyard and Karl Manrodt. 2nd ed. p. cm Includes bibliographical references and index. ISBN Contracting out. I. Ledyard, Mike. II. Manrodt, Karl B., 1957 III. Title. HD2365.V dc A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. Second PALGRAVE MACMILLAN hardcover edition: April
7 DEDICATION We would like to dedicate this book to our spouses, who have selflessly given us time, support, and encouragement throughout our careers. We are believers that win-win principles are a foundation for success in our personal lives. Our marriages are a testament that together is indeed better. Greg, Kris, and Susan: We are in your debt, and appreciate all that you have done for us. We look forward with love to being together for many years to come. Greg Picinich Vested to Kate Vitasek since May 17, 2003 Kris Ledyard Vested to Mike Ledyard since June 9, 1973 Susan Manrodt Vested to Karl Manrodt since June 12, 1982
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9 CONTENTS List of Figures xi Introduction 1 PART I DIAGNOSING THE NEED Chapter 1. The Whole Nine Yards 7 Chapter 2. An Outsourcing Primer 17 Chapter 3. Ten Ailments of Traditional Outsource Relationships 27 Chapter 4. Chapter 5. PART II SETTING THE RULES Changing the Game: The Rise of Vested Outsourcing 41 The Game-Changing Economics of Vested Outsourcing 67 PART III VESTING THE PARTNERSHIP Chapter 6. Lay the Foundation 91 Chapter 7. Understand the Business 107 Chapter 8. Align Interests 133 Chapter 9. Establish the Contract 145 Chapter 10. Manage Performance 169
10 x Chapter 11. Getting to We: A New Negotiating Model 177 Chapter 12. Going the Whole Nine Yards: The Dell GENCO ATC Vested Journey 185 Conclusion 199 PART IV Resources and FAQs 205 Acknowledgments 211 Notes 213 Index 223
11 FIGURES 3.1 Activity Trap Characteristics Business Mapping Framework Performance Pyramid The Five Rules of Vested Vested Outsourcing Decision Matrix Payoff Matrix Win-Lose Matrix Suggested Additional Reading Vested Implementation Plan Vested Project Plan Stakeholder Importance Process Map Process Analysis Quantitative Benchmark Quantitative Assessment Example Process Assessment Summary To-Be Process Goal Performance Roadmap Total Cost of Ownership Exterior Lighting Example Performance Alignment Performance Misalignment Traditional Outsourcing Vested Outsourcing Vested Risks Risk Likelihood Risk Severity 137
12 xii 8.6 Risk Level Risk Mitigation Example Requirements Roadmap Comparison of Compensation Methods Cost-Reimbursement Plus Fixed Fee Pricing Model Selection Guidance Risk Comparison Pros and Cons of Incentives Incentive Types The Transitions of SRM Communication Model Meeting Structure 173
VESTED. HOW P&G, McDONALD S AND MICROSOFT ARE REDEFINING WINNING IN BUSINESS RELATIONSHIPS. KATE VITASEK and KARL MANRODT with JEANNE KLING
VESTED VESTED HOW P&G, McDONALD S AND MICROSOFT ARE REDEFINING WINNING IN BUSINESS RELATIONSHIPS KATE VITASEK and KARL MANRODT with JEANNE KLING vested Copyright Kate Vitasek and Karl Manrodt, 2012. All
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