The term "Vested Outsourcing"—a method of contracting for services that eschews the traditional pay-per-transaction model in favor of rewarding the vendor for outcomes—is by now familiar to many supply chain professionals. But "Vested" is not just for logistics outsourcing. As a new book makes clear, companies are successfully applying the concept to many different facets of their business relationships.
Written by Kate Vitasek of the University of Tennessee and Karl Manrodt of Georgia Southern University with Jeanne Kling, the book is titled Vested: How P&G, McDonald's, and Microsoft are Redefining Winning in Business Relationships. As the title suggests, it looks at how these companies as well as the U.S. Department of Energy, the Minnesota Department of Transportation, and small businesses and nonprofits are applying the Vested model to their business relationships.
Five of the chapters are devoted to case studies that show how a company implemented one of the five core principles of the Vested concept: prioritize outcomes, not transactions; focus on what you want from a partner, not on how it is achieved; establish clearly defined and measurable desired outcomes; set a pricing model with incentives that foster a win-win scenario; and establish a flexible governance structure that embraces change and improves business insight. One of the most interesting is the story of how Minnesota's Department of Transportation used creative approaches to contracting to help it replace the collapsed I-35W bridge in less than 18 months—and do it under budget. The final chapter looks at how and why those rules have helped organizations of all types and sizes.
Throughout the book, readers will learn more about the Vested model and get ideas for applying the concept in their own companies.