Outsourcing 3.0

THE HIGHEST FORM OF OUTSOURCING

Outsourcing to Jointly Improve Operation

In some cases, outsourcing can lead to joint efforts with the vendor for process innovation, reducing cost, improving quality, or both.

Many companies know their internal processes are sub-optimal, such as logistics or supply chain management. They initiate an outsourcing project in the belief that due to superior process knowledge of vendors, outsourcing will result in a process re-engineering.

However, there are countless cases where such outsourcing has failed to deliver the results because the vendors were least interested in process improvement even if they were capable of doing so.

Somewhat obviously, any dollars saved due to such process improvement will come straight off their revenue base.

Does this mean that joint process improvement will not work in every case? We believe this will only work when the customer brings equal process knowledge and diligence to the table.

The customer will have to drive the joint process improvement initiative to gain value from the vendor’s superior process knowledge. They will have to instil this drive in the KPIs that form the basis of the ongoing relationship management protocol.

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