In-Company Short Training Courses in Procurement, Purchasing & Supply.

Course Title:  Buying Assets & Outsourcing Services.

The course is designed to:

Provide a sound understanding of the key issues, skills, tools and techniques used in the procurement of major assets and the outsourcing of major services. Using practical exercises built around the tools, techniques and concepts covered in the course students will learn how the management of these activities takes place within their business context. The course aims to enable attendees to contribute to the strategic decisions relating to these modes of buying activity.

Course aims:

To develop an in-depth understanding of the key activities involved in managing the procurement of major capital assets and the outsourcing of key services. To appreciate the strategic impact of both these activities on the organisation’s strategic standing, and to highlight the significance of this activity on the role of the procurement function and its profile within the organisation.

Learning Outcomes – At the end of the course students will be expected to be able to:

  • Participate in strategic make or buy decisions for their organisation.
  • Demonstrate the financial and strategic significance of asset procurement decisions.
  • Be able to construct and manage a tender process that manages the procurement process for maximum benefit to the organisation.
  • Prepare suitable investment appraisal techniques for assets purchase and service outsourcing including; total life cost modelling and the use of financial techniques including Cash Flow analysis, Discounted Cash Flow, Net Present Value and Internal Rate of Return calculations, to undertake risk and sensitivity analysis of supplier offers.
  • To undertake option appraisal of competing offers for capital investment.
  • Know how to construct the business case for a capital investment.
  • Know how to construct the business case for a strategic outsourced service.
  • Participate in specification design including the setting of relevant and appropriate Key Performance Indicators.
  • Khow how to manage the tendering cycle for a complex service including managing cross functional teams in evaluating and negotiating offers.
  • Be able to contribute to the management of the change issues that surround the implementation of a new service or asset.

Indicative Content:

The financial impact of asset procurement and service outsourcing:

  • What is an asset?
  • How do assets impact on the finances of an organisation?
  • What is outsourcing?
  • What are the potential benefits of outsourcing on the finances of an organisation?

The total life cost of ownership concept;

  • Managing tenders.
  • Tendering on a total life/contract cost basis.
  • Structuring the tender for each phase of asset ownership or service contract term.
  • Buy phase issues.
  • Own and use phases.
  • Disposal phase.
  • Sourcing and selecting suppliers.
  • Contracting and support.

Undertaking Investment appraisals:

  • What is investment appraisal?
  • Methods for assessing competing options for capital.
  • Methods for determining the return on investment of competing options for capital resources.
  • Common investment appraisal techniques.
  • Building an investment/outsourcing business case.

Practical aspects of asset procurement:

  • Supporting assets in the field.
  • Spares ranging approaches.
  • Configuration control.
  • Support contracts for spares and asset support.
  • Delivering to an agreed service level.

Outsourcing major services:

  • Definitions of Outsourcing.
  • History of Outsourcing.
  • Trends and directions of outsourcing.
  • Why organisations outsource.

Strategic considerations in the outsource decision:

  • The make or buy decision.
  • Tactical or strategic reasons for outsourcing.
  • Stakeholders and outsourcing.
  • Restraints and constraints to the process.
  • Internal impact analysis and considerations.
  • Asset transfer and ownership.
  • Practical resource considerations.

Managing the process:

  • Governance.
  • Stakeholder management.
  • Tracking the project.
  • Financial management approaches.
  • Performance monitoring.

Doing the work:

  • Understanding the current ‘AS IS’ condition.
  • Understanding the market.
  • Deciding the outsourcing strategy and options.
  • Structuring the tender.
  • Structuring the contract.
  • Deciding the terms of contract.
  • Specifying the requirement.
  • Setting out the contract management and administration processes.
  • Managing Contract Award.
  • Managing the relationship.

Building the business case:

  • Cost benefit case.
  • Recommending a course of action.
  • Risk analysis.
  • Sensitivity analysis.
  • Implementation approaches.
  • Managing the change.

Further reading:

The course will identify and cover in full detailed learning outcomes required for assessment purposes. However, if you wish to read further in order to supplement your learning and cement your understanding of the course, content, aims, and purposes, we recommend the following book(s):

Purchasing and Supply Chain Management – Lysons and Farrington.

Management and Organisational Behaviour – JL Mullins.

Business Process Outsourcing: Process, Strategies, and Contracts – John K. Halvey and Barbara Murphy Melby.

Essentials of balanced scorecards – Mohan Nair.