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California Management Review
California Management Review is a premier academic management journal published at UC Berkeley
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Article Information
Strategies for Managing Suppliers of Professional Services
Baker, Wayne E., and Robert R. Faulkner
33
/
4
(
Summer
1991
):
33
-
45
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.