Best Practices in Services Procurement

Open Access
Davis, Leah Simone
Area of Honors:
Supply Chain and Information Systems
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Robert Alexander Novack, Thesis Supervisor
  • John C Spychalski, Honors Advisor
  • Services Procurement
  • Services Sector
  • Purchasing
  • Sourcing
  • Supply Chain
Due to globalization, outsourcing and recent economic events, the services sector has gained increased importance in the global economy. Correspondingly, the field of supply chain management must evolve immensely to accommodate and understand the nuances of service supply chains. Despite the high level of spend attributed to services, most existing academic research in the field exclusively describes the processes involved in the manufacture and distribution of goods. Without academic guidance, service supply chains and their respective procurement organizations have been challenged to combat decreasing margins through strategic purchasing decisions and cost reduction. In this research, six companies were studied and interviewed about their respective practices in services procurement. The respondents shared their general perceptions and experiences in supplier selection, relationship management, contractual agreements and performance management. Their challenges, goals and operational procedures observed in these six procurement organizations were compiled to determine best practices in the developing field of services procurement. In general, this research determined that procurement organizations should align incentives with service suppliers through long-term relationship development, performance-based contracts and detailed statements of work with measurable deliverables.