What is a common objective in establishing a contract with an outsourced supplier?

Establishing a contract with an outsourced supplier primarily aims to manage performance levels and maintain quality. This objective is essential as it provides a framework for both parties to understand expectations, quality standards, deliverables, and performance metrics. By clearly defining these parameters in a contract, organizations can set benchmarks for assessing whether the supplier meets the desired standards over time.

This approach fosters accountability and helps ensure that the products or services delivered align with the company’s strategic goals. It also allows for mechanisms to be put in place for addressing any deficiencies in performance, thereby promoting continuous improvement in the supplier relationship.

Other objectives, like eliminating all risks associated with outsourcing, are unrealistic since some inherent risks will always exist in any business relationship. Increasing the number of suppliers may not directly relate to the core intent of establishing a specific contract, as this can dilute focus and complicate management efforts. Lastly, while securing long-term contracts can be a goal, the primary focus in establishing a contract is to ensure effective management of performance and quality, which are critical to achieving long-term success in outsourcing arrangements.