Outsourcing 3.0

THE HIGHEST FORM OF OUTSOURCING

Outsourcing Tasks Does Not Transfer Responsibility For Those Tasks

outsourcing

Outsourcing Tasks Does Not Transfer Responsibility For Those Tasks

Outsourcing Tasks Does Not Transfer Responsibility For Those Tasks

President Obama quipped in an interview with CNN. On May 14, 2010 "you had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else...The American people could not have been impressed with that display, and I certainly wasn't." The legal wrangling continues and will take considerable time and expense to resolve. We need not go into the gory details of dollar numbers too big to even fully comprehend, but from our perspective in this Chapter three key points stand out:

Outsourcing Tasks

While these 3 key take-aways are still relevant to our discussion here, what is more relevant is the fact that all the companies in question will have to continue to outsource (and insource).

So the practice of outsourcing itself will continue unabated. What will change after this learning experience is that the practice will be carried out in a much more sophisticated manner. That is the whole point of this book.

Understand Outsourcing Tasks Before You Regret.

Before more on to newer, more sophisticated models of outsourcing that are emerging and examining them in more details in the next few chapter, let us consider the evidence on the satisfaction from current outsourcing arrangements.

Data, anecdotes and case histories abound on the misapplication of information technologies for supply networks.

Here's What People Are Saying About Outsourcing Tasks.

Not too many years ago, a very large corporation operating worldwide, made news with the downgrading of their earnings expectations due to supply chain system’s implementation setbacks.

The expectation was that the new system would reduce the new production cycle from 1 month to 1 week.

Furthermore, it would better match the demand and supply of its products to place the correct products in the right locations and quantities, all at the right time - a very lofty goal.

The company spent an enormous amount of money, exceeding US $400 million in order to achieve its aim. However, the software system 'never worked right'.

It caused the factories to crack out too many unpopular products and not enough of the trendier ones in high demand. While making the earning downgrade, the CEO asked the rhetorical question, ‘is this what we get for $400 million?’

Outsourcing Tasks Is So Famous, But Why?

The market analysts were not surprised. One respected market analyst [AMR] commented, ‘fiascos like this occur all the time but are usually kept quiet unless they seriously hurt the bottom line.’

Another respected market analyst commented that while the CEO made it sound like it was a surprise for him, if he did not have checkpoints for the projects, he does not have control over his company.

A third analyst commented that companies are confused by escalating market hype and too often underestimate the complexity and risks.

Another [Forrester Research] commented 'when the software projects go bad companies are more likely going to scurry up and cover it up because they fear that they are the only ones having trouble.

But far from it; our conversation and research reveals this company was not unique or the only one having this kind of trouble'.

Despite their lofty goals, many of the large information technology deployment projects derail. It takes time for the word to filter out because, in most cases, the executives involved in the process are far too embarrassed to talk about what happened.

They do mutter among themselves; after several similar instances the mutterings become more vocal and a trend emerges where a number of people start talking about the shortcomings of the system itself or the implementation process or of the time taken for implementation.

Learn More About Outsourcing

Because the cost of this failure is so high – greater than $400 Million in the above case – it is instructive to understand the real root causes of this failure. I am not looking to apportion the fault or apportion the blame in this chapter.

BOOKS ON OUTSOURCING

Now You Are Ready To Consider The Right Outsourcing For Your Operation

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THE HIGHEST FORM OF OUTSOURCING

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About the Principal Author of Outsourcing 3.0 - Vivek Sood

Vivek Sood - Author Outsourcing 3.0

Today, Vivek and his partners are among 20-30 people on Earth who have this deep understanding of supply chain systems, practices and tools. CEOs, COOs, executives and Boards call them in the most challenging situations once they know the full potential of supply chain based transformations. Following are key milestones in Vivek’s journey:Started in 1983 as a merchant navy cadet at 18 years age, and worked his way to qualify as a Captain – qualified to take command of any merchant ship, worldwide.

  • Earned a top tier MBA from UNSW at the top of his class.
  • Joined highly regarded strategy consulting firm Booz Allen & Hamilton, consulting to the CEOs, Boards and senior management of global corporations within Australia.
  • To learn and specialise in the supply chain – against all odds, sought out the co-inventor of the supply chain in Germany and convinced him to be a partner in his firm, GLOBAL SUPPLY CHAIN GROUP, launched in January 2000.
  • More than 500 successful blue-chip projects with high impact business transformations in large corporations using the full power of SUPPLY CHAIN MANAGEMENT.
  • 4 Seminal and path-breaking business books IN SUPPLY CHAIN MANAGEMENT – these are available in bookstores and universities, and libraries worldwide.

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