Sourcing strategies for services that become part of the buying company's value proposition

Organisations are increasingly buying services that become part of their value proposition to their customers. At the same time, business services traditionally are sourced and contracted for in a traditional way. We study the single case of buying cleaning services by a Train Maintenance Company (TMC). Because of the high expenditures on cleaning services and the relatively low supply risk, cleaning services for TMC are seen as a leverage commodity. Therefore, the sourcing strategy adopted by TMC is based on competitive bidding. However, TMC’s cost driven orientation clearly affects the provider’s service quality in a negative way. We show why this sourcing strategy may not be the most effective strategy for this type of purchase and propose a new, more effective sourcing strategy for business services that become part of the buying company’s offering to their customers.