The purpose of this paper is to introduce and provide an insight into the benefits of outsourcing the procurement function for engineering commodity items.
Research into the literature presents the development of outsourcing procurement functions and this manuscript adds to the body of knowledge through introducing the outsourcing of engineering commodity procurement, illustrated with the case study example.
A US Aerospace Fortune 50 company has made savings by outsourcing the procurement of commodity engineering parts. This has occurred in two stages. Firstly the commodity procurement was locally outsourced and staff migrated to the service provider to whom commodity procurement was a core competence enabling them to offer cost savings. Secondly the back office and telephone service was moved to India, further reducing cost whilst enhancing the service through an increased headcount.
The paper provides the first example of the two stages of outsourcing engineering commodity procurement.
