Comments on: #1 – Penny Wise and Pound Foolish

By: Kate Vitasek

Kate Vitasek — Thu, 11 Aug 2011 04:54:13 +0000

Thank you for asking for clarification. By the term “bought” what I meant was the service provider priced the work so low they in essence won the work because of the price advantage over the competitors/market prices. The service provider lost money on the work – and those losses could not be sustained.

By: Steve

Steve — Wed, 10 Aug 2011 16:26:25 +0000

Sorry I lost the plot.

#The outsource provider “bought” the business, and eventually could not sustain the losses of profit.#

I didn’t quite get that. Are you saying the outsource provider bought the outsourcing company – 800 pound gorilla in question

Would appreciate a clarification

By: Rule #4 Optimize Pricing Model Incentives

Rule #4 Optimize Pricing Model Incentives — Tue, 14 Jun 2011 21:32:40 +0000

[...] — and do — create paybacks for both parties. Following Vested Outsourcing Rule #4 prevents the Penny Wise and Pound Foolish and Sandbagging ailments. Filed Under: 5 Rules Tagged With: Incentives, pricing [...]

By: Nhan

Nhan — Wed, 12 Jan 2011 10:26:35 +0000

Thanks Kate! Your brief descriptions reflect the conventional Outsourcing very well. I will use some of your ideas for my Slideshare presentation on Outsourcing/ Offshoring (of course with reference to this good blog).

By: The Gorilla vs. the Elephant, Part 2: The Elephant | Vested Outsourcing

The Gorilla vs. the Elephant, Part 2: The Elephant | Vested Outsourcing — Thu, 24 Jun 2010 09:09:48 +0000

[...] a classic case of Vested Outsourcing’s Ailment 1, Penny Wise and Pound Foolish, which might gain some short term returns, but usually goes wrong at [...]

By: The Gorilla vs. the Elephant, Part 1: The Gorilla | Vested Outsourcing

The Gorilla vs. the Elephant, Part 1: The Gorilla | Vested Outsourcing — Mon, 21 Jun 2010 09:05:29 +0000

[...] ‘penny wise and pound foolish’ (a typical gorilla tactic as described in Vested Outsourcing’s Ailment 1) and browbeating your suppliers or outsourcing providers to get the cheapest possible deal is that [...]

By: Tom Blades

Tom Blades — Wed, 23 Dec 2009 20:38:55 +0000

Very well written. I have been looking for balanced and insightful commentaries on exaclty this subject. I am a sales exec for a 3PL company (3rd party logistics) and outsourcing is how I make a living. Price alone decision making creates problems for all industries. So many professionals today are educated enough on LEAN principles to know that LEAN DONT MEAN CHEAP! Lean concepts are about efficiency and long term cost savings. Evaluate your outsourcing alternatives by proven success metrics, reliability and competitive analysis and win the right to keep your job perople!

By: Rule #4 Optimize Pricing Model Incentives | Vested Outsourcing

Rule #4 Optimize Pricing Model Incentives | Vested Outsourcing — Fri, 06 Nov 2009 20:38:30 +0000

[...] — and do — create paybacks for both parties. Following Vested Outsourcing Rule #4 prevents the Penny Wise and Pound Foolish and Sandbagging [...]