The procurement guidelines for “products purchase” have gone through many iterations and almost all organisations have established practices that are very close to the best practices in the industry.   Can we be able to comfortably say the same thing for Service Procurement ?  The objective of this page is to highlight some of the major aspects of Service Procurement through its life cycle.   Following stages of Procurement Life Cycle have been taken from Project Management Body of Knowledge (PMBOK®) from Project Management Institute (PMI® ).

Procurement Planning:

This the starting point for the service procurement life cycle and the activities in this phase are done internally within the organisation.   There are three areas which require special attention.  The first one is to gather carefully a consolidated list of the requirements from all the users. The second is to prioritise them and finally, classify them into three important categories, namely, “must have”, “nice to have” and “what is not needed”.

Solicitation Planning:

During this phase, the major activity is to get the list of potential service providers who would be able to offer credible solution to the requirements.   The list of service providers could be from the existing list of suppliers or those who have delivered similar services in the industry and/or in the physical location. In order to evaluate the offers from the service providers objectively, it would be good  to include a standard template or format for the response, in the Request for Proposal.

Solicitation:

During this phase, the quotes or proposals are obtained from the potential service providers.         The request for proposal should also seek ideas and suggestions from the service providers to achieve a higher level of productivity and details about other possible automation tools. The request for proposal should stress the overall importance on the process management and encourage the suppliers to provide details of the service delivery process.   The request should also include the minimum required service level for each of the requirement.

Source Selection :

Both the past performance and the potential to perform in future are important while evaluating the Service Providers.    In service purchasing, the priority should be given to those vendors who are aligned or subscribed to the principles of  ‘teaming’ and ‘collective learning’.   Similarly priority should be given to those service providers who clearly demonstrate the step by step process of  achieving the end result, than to those who are only committing to the end-deliverable, like SLA.      Generally, the successful service providers are those, who demonstrate innovation and operational excellence.

Contract Administration:

During this phase, it is highly recommended that both parties (Service Provider and the Service User) remain very objective, while reviewing the performance of the service contract.    What is needed is a long term approach, instead of drilling down into the disadvantages or difficulties of the immediate past or current situation.   It is also beneficial for the service users to motivate and encourage the service providers to be more transparent and more communicative.

Contract Closeout:

This is the final phase of a procurement life cycle.   At the end of each service contract, the team consisting of users and procurement should gather and collect the lessons learned.  This should be shared with the executive management of the company and also used to upgrade the service procurement guidelines within the company.

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