Choosing the right sourcing model for thirdparty logistics outsourcing agreements

Modern outsourcing is more than a typical make–buy decision. Rather, there is a wide range of sourcing business models that today’s practitioners can choose from. Unfortunately, the fundamental nature of how goods and services are procured is not keeping pace with best practices of tapping into more mature sourcing business models; many business professionals wrongly assume that a transaction-based business model is the only way to architect a supplier contract. This paper provides an easy-to-understand framework for classifying the various contracting approaches along a sourcing continuum. A key goal of the paper is to help organisations understand the various models and see examples of how they are used in practice.