Strategies for Managing Suppliers of Professional Services

by Wayne Baker, Robert Faulkner



Professional services-advertising, financial services, legal services, management consulting, and others-are critical inputs and major corporate expenditures. Yet managers of suppliers of professional services lack a concrete management framework for enhancing value and controlling costs. This article provides a practical framework, based on extensive research, that incorporates four generic strategies for managing suppliers of professional services. These strategies can increase efficiency, reduce costs, improve quality, and strengthen bargaining power. While sole-source strategies often make sense for managing industrial parts suppliers, multiple-source strategies maximize the value of professional services. Corporate managers who resist offers for one-stop shopping and cross-selling-who instead develop credible internal alternatives, link pay and performance, and increase monitoring and auditing-can significantly enhance the value of professional services.

California Management Review

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Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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