6: Plan sourcing activities

1. Secure buy-in

Conduct meetings, workshops and/or presentations with department heads, procurement teams, and frontline staff to communicate the benefits of outsourcing and align expectations to secure buy-in. Ensure to keep engaging key decision makers through the process.

2. Understand procurement procedures

Familiarize yourself with the internal and local procurement procedures to ensure compliance and alignment with organizational policies:

• Identify internal templates & procedures: Understand which procurement templates and procedures are required by your organization's procurement department or external agencies

• Coordinate with the procurement department: Engage early with the procurement department to align on timelines, documentation, and templates

• Prepare supporting documents & annexes: In addition to the Scope of Work (SOW), identify additional annexes such as technical specifications, data reports, or relevant background information

• Complete the internal SOW: Building on the SOW created in Step 5, ensure the document is refined to reflect any updates from stakeholders and aligns with your strategic objectives. This internal version of the SOW will serve as the foundation for final adjustments before being issued to potential bidders in Step 7

This ensures you are prepared for the next step, where the final SOW and supporting documents will be issued to potential bidders.

3. Select the appropriate sourcing method

Decide on the sourcing method that best fits the complexity and scale of your logistics needs, and is aligned to the internal procurement policies:

• Request for Quotation (RFQ): Used when requirements are clear and specific, such as transport services or straightforward warehousing contracts. This method focuses on price and basic service capabilities

• Request for Proposal (RFP): Best suited for complex needs requiring LSP input to define the solution. This method allows for flexibility and encourages innovation in proposals. Ideal for logistics operations that require detailed plans, such as integrating technology solutions or optimizing supply chains

• Request for Tender (RFT): Suitable for services with well-defined requirements where a formal, structured bidding process is needed. Used when the organization has a clear understanding of its needs

When selecting the sourcing method, consider factors such as geographic reach or specialized handling requirements. For example, if you are managing the distribution of health products across remote regions, an RFP would allow LSPs to propose tailored solutions addressing specific challenges such as difficult terrains and cold chain management. Engage key stakeholders in this decision to align with broader organizational needs.

4. Develop sourcing plan

Begin by developing a sourcing plan that outlines your organization's overall approach to outsourcing logistics services. This plan should include clear objectives, such as cost reduction, service improvement, scalability, or enhanced focus on core competencies. Develop the timeline, set key milestones and decision points throughout the process, from the initial planning stages through to contract management. It should include the following key elements:

• Key activities & milestones: Identify specific activities such as completing the internal SOW, developing procurement documents, issuing requests for proposals, receiving and evaluating bids, conducting negotiations, and contract signing. Each activity should have a clear deadline to ensure the process stays on track

• Sourcing phases: Map out each phase of the sourcing process, vendor selection, contract negotiations, and the transition of services. Ensure there are clear decision points to guide progress throughout these phases

• Allow for contingencies: Include buffer periods to account for potential delays or unexpected issues that may arise. For example, legal reviews or contract negotiations can take longer than anticipated, and incorporating extra time will help maintain the overall timeline without causing disruptions

• Transition & implementation phases: If outsourcing involves a handover of services, such as warehousing or transportation, make sure the timeline includes realistic deadlines for transitioning logistics operations to the selected provider(s). This should cover essential activities such as system integration, technology setup, and staff training

• Stakeholder approvals: Build in checkpoints where key stakeholders will review and approve documents or decisions, such as finalizing the proposal, evaluating responses, or approving contract terms. These checkpoints ensure alignment with organizational goals and prevent delays due to miscommunication

5. Assess contract mechanism & requirements

Plan for the contract mechanism and requirements based on the scope and nature of the outsourcing:

• Determine contract type: Decide whether the procurement will follow standard terms and conditions, use national or international frameworks, or require a specific contract negotiation stage. This decision impacts the level of legal support needed and the complexity of the contracting process

• Evaluate the need for contract drafting or modification: Assess whether a new contract needs to be drafted or if an existing template can be modified. For example, if your organization already uses standardized logistics contracts, minor modifications may suffice. However, for complex multi-regional operations, custom contracts might be required to address specific needs

• Strategic services & contract management: Ensure that contract management and strategic alignment clauses are clearly defined. Consider including key KPIs, Service Level Agreements (SLAs), and terms for managing strategic relationships

This ensures your organization is legally prepared and that contracts are tailored to your specific logistics outsourcing needs, while also making sure the internal SOW is completed and ready for further adjustments in the next steps.

6. Allocate resources

Determine the internal resources needed to support the sourcing process, including personnel required for planning, evaluation, and ongoing contract management. Assign key staff, such as project managers, logistics specialists, and procurement officers, to manage the sourcing process. For example, a dedicated contract manager could oversee compliance with SLAs once the LSP is operational.

Subsequently evaluate the organization’s capacity to manage the transition to outsourcing, including staff training needs and possible restructuring.

7. Establish communication plan

Develop a comprehensive communication plan to maintain alignment and transparency throughout the sourcing process. The communication plan should include:

• Regular updates: Schedule regular meetings or updates to keep stakeholders informed about progress, timelines, and any changes in the sourcing process

• Feedback mechanisms: Establish clear mechanisms for gathering feedback from stakeholders, such as surveys or regular check-ins, to ensure their needs and concerns are being addressed

• Change management strategy: Develop a change management strategy to guide the transition and address any resistance. This strategy should include clear communication about the impacts of outsourcing, particularly on roles and responsibilities, as well as providing training and support to staff adapting to the new model. Regular feedback sessions can help address concerns and ensure smooth implementation.

For example, weekly status meetings with the procurement team could be scheduled to discuss progress and flag any risks, ensuring proactive issue management.