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"We Weren't Buying Services, We Were Renting Bodies": A Procurement Head’s Playbook for Strategic Partnerships

By Express HR Solutions on 2025-08-20 16:49:01

For anyone in procurement or finance in India, the scene is all too familiar. The end of the quarter brings a stack of vendor contracts up for renewal. The dance begins: endless negotiations, squeezing margins by a few percentage points, and the relentless pressure to select the L1 bidder. We’ve become experts at buying things cheaply.

But have we become experts at buying results?

This traditional procurement model, focused on inputs and costs, creates vendors, not partners. It rewards activity, not outcomes. But a few forward-thinking leaders are starting to rewrite the rules. We recently sat down with a trailblazer in this space, "Priya Menon," the Head of Strategic Sourcing for one of India’s largest manufacturing conglomerates, to understand her playbook.

The Problem: When Your Contracts Reward the Wrong Thing

When Priya took over the strategic sourcing division two years ago, she inherited a portfolio of over 50 service contracts for their main plant near Chennai. Everything from facility management and logistics to contract technical labour was outsourced. The contracts were standard. They paid per hour, per person, per square foot.

"I realised we weren't really buying services; we were just renting bodies," Priya told us, speaking with the clarity of someone who has fought in the trenches. "Our contracts were built around inputs. The more hours a vendor billed, the more money they made. There was no incentive for them to be efficient or innovative."

The absurdity of the situation hit home during a review of their maintenance contract.

"We were paying our maintenance vendor more money when our most critical machines broke down because of all the overtime and emergency call-out fees," she explained. "Think about that. Our success—uninterrupted production—was a financial loss for them. Their success—more billable hours—was a massive loss for us. The model was fundamentally broken."

The Shift: From Buying Inputs to Buying Outcomes

Priya knew a change was needed. The goal wasn't to squeeze another 5% out of the vendors. The goal was to completely change the nature of the relationship. She decided to pilot a new model, moving from a transactional agreement to an outcome-based partnership.

"We had to stop asking, 'How many people will you deploy?' and start asking, 'What is the business result you will guarantee?'" she said. This simple shift in language led to a profound shift in strategy.

Priya’s Playbook: 4 Steps to Building a True Partnership

Here is the four-step playbook Priya’s team used to transform their most critical maintenance contract from a cost centre into a value driver.

Step 1: Define Your "North Star" Outcome

First, her team got laser-focused on what they actually wanted to buy. They didn't need "maintenance services." They needed "98% guaranteed uptime on our three critical production lines." This became the "North Star" for the entire contract. It was a clear, measurable business outcome that everyone—from the CFO to the plant manager—cared about.

Step 2: Tie Everything to Critical KPIs (Asset & Labour)

With the outcome defined, they identified the two key levers that would deliver it. They built the entire commercial model around just two sets of KPIs:

This second KPI ensured the partner couldn't just "hope for the best"; they had to invest in having the right talent available and ready to deploy at all times.

Step 3: Redesign the Commercials for Shared Risk & Reward

The new contract had a reduced fixed monthly fee. However, up to 30% of the total contract value was made variable, directly tied to their performance against the uptime and labour KPIs.

"We built a simple model," Priya explained. "If they hit the targets, they earned their full fee. If they exceeded them, they shared in the upside with a performance bonus. If they missed the targets, they took a direct financial hit. Suddenly, our goals were perfectly aligned."

Step 4: Hand Over the "How" and Empower Your Partner

This was the final, critical step. Instead of dictating how many people the vendor should hire or what their shift patterns should be, Priya's team stepped back. They had defined the "what" (98% uptime); it was now up to the vendor to figure out the "how."

This empowered the vendor to innovate. They were now motivated to invest in better training for their staff, implement predictive maintenance technology, and optimise their own workforce scheduling, because every improvement directly impacted their own bottom line.

The Results: More Uptime, Lower Costs, and a Real Partnership

The results from the one-year pilot were staggering. Unplanned downtime on the critical lines dropped by over 40%. The vendor, now a true partner, proactively identified and fixed issues before they caused a stoppage.

And the cost?

"Our total cost of ownership actually went down," Priya says with a smile. "What we paid in performance bonuses was a fraction of what we saved by avoiding production losses and expensive emergency repairs. But the biggest change was the relationship."

"The conversation changed completely. Our quarterly meetings are no longer about fighting over line items on an invoice. We now talk about predictive analytics, multi-skilling their technicians, and how we can jointly push for 99% uptime. They are as invested in our production targets as we are."

 

Are You a Buyer or a Builder?

Priya’s story is a powerful reminder for every procurement and finance leader in India. In today's market, you can be a buyer, constantly squeezed between price and performance. Or you can be a builder, architecting strategic partnerships that create sustainable value.

Her playbook proves that the 'labour' component is not just a line item; it's a strategic lever. Tying contracts to sophisticated labour KPIs like 'skilled response time' or 'first-time fix rate' is impossible without a manpower partner who thinks like a business owner.

Express HR Solutions specialises in building and managing high-performance teams that are ready to operate in these demanding, outcome-based models. We provide the skilled, accountable talent that ensures you can turn your procurement function from a cost centre into a powerful engine for business results.