SUMMARY OF OUTSOURCING 3.0
The book is divided into three sections - outsourcing basics, how to outsource well and a comprehensive case study.
In the first section of this book we will discuss why companies outsource. We will also discuss when to outsource, and when not to outsource – both questions are critical.
Chapter 2 describes a simple model that allows you to make such crucial decisions. Chapter 3 talks about several myths surrounding outsourcing that you need to be aware of.
Chapter 4 goes into detail of why traditional outsourcing fails and the tell-tale signs.
Chapter 5 talks about the current remedies to failures of traditional outsourcing and why they are proving inadequate.
Chapter 6 discusses how modularisation and results- focused outsourcing allows you to flexibly design your own best-of-breed solution every time.
In the second section of this book, we will address the question of how to outsource well.
Chapter 7 talks about why preparation is crucial in setting the stage for the coming game.
Chapter 8 describes how to set the rules of the game while chapter 9 discusses the actual process of vendor selection.
Chapter 10 discusses integration of vendor in your overall business network and Chapter 11 describes how to get the most value out of the entire operation.
In the third section we have a detailed case study showing how results-focused modularisation and outsourcing can work in practice to transform an entire industry, reduce the cycle time by a factor of 83% and overall costs proportionately.
More importantly, it opens up the industry to new bouts of innovation creating types of products which would not have been possible without the new model.
Following are the key learnings from each of the chapter.
Chapter 1 – Why Outsource?
- Learn the drivers behind companies’ decisions to outsource
- Understand how outsourcing fits into the big picture
Chapter 2 – The $483 Billion Question – "When to Outsource and When Not to Outsource?"
- Find out what the most outsourced service on earth today is
- Understand the diverse landscape of outsourcing
- Discuss Core Competence as an elusive concept in the debate on outsourcing
- Learn how to navigating the grey area between "Must outsource" and "Must not outsource"
Chapter 3 – Do Not be Led Astray by These Myths about Outsourcing
- Understand that outsourcing is an emotionally charged topic that can be prone to fabricated myths
- Learn about the seven myths that can fog your vision
- Learn how to debunk these myths
Chapter 4 – Here is Why Traditional Outsourcing Fails
- Read and analyse various examples of outsourcing catastrophes
- Learn that outsourcing tasks does not transfer responsibility for those tasks
- Learn the specific implications of outsourcing failure
- Understand the key mistakes in large scale outsourcing projects and the reasons behind them
Chapter 5 – What We are Doing about Outsourcing Failures is Not Enough!
- An overview of different outsourcing models
- Learn how these models stack up against one another in various criteria, including:
1. Following are the key learnings from each of the chapter.
2. Control and flexibility of the agreement
3. Strategy and degree of outsourcing
4. Duration and stakes of the contract
5. Resources needed and localization
6. Size and assets specificity
Chapter 6 – Results-Focused Outsourcing and Modularisation is the Solution
- Learn the secret behind outsourcing success and the key pillars of Modularisation: Standardisation, Homogenisation, Commoditisation
- Understand benefits and approaches to Modularisation
- Get the overall taste of Results-Focused Outsourcing and Modularisation (ROM), the key model of this book
- Understand briefly what each stage of ROM entails
Chapter 7 – Preparation is Critical
- Understand that the failure rate of outsourcing is still high and failures often happen because of poor preparation process
- Learn the key questions to ask during preparation
- Learn the key steps in preparation: Set service objectives - Analyse customers & product segmentation – Define service parameters
- Get some key pointers about issues to manage during the preparation stage
Chapter 8 – Rules of Engagement
- Understand the importance and benefits of the market engagement stage
- Learn the different engagement processes for different needs
- Learn the key steps in market engagement: Gather service data and requirements -Identify Market Service Dynamics - Custom design market engagement process
- Understand the importance of a structured approach towards market engagement
Chapter 9 – Natural Selection
- Identify the five most common mistakes in vendor selection
- Learn the key vendor selection steps: Collate and analyse vendors’ propositions – Select the vendor – Create and agree on performance measures
- Learn about different types of criteria, selection methods, types of suppliers
- Understand that negotiation should help you retain control and its key steps
Chapter 10 – Seamless Integration
- Understand why integration is necessary for outsourcing to work
- Learn that a continuous flow of information, collaborative partners enhance the relationship
- Understand that Supply Chains are morphing into integrative business networks and its implications
- Learn the key steps in integration: Create data collection management & analysis protocols - Create presentation standard for data and information -Put in place protocols, systems & processes
- Learn how to motivate suppliers and the importance of corrective procedures
Chapter 11 – Real Value Creation
- Understand that value means more than monetary gains
- Understand the network effect and the real power of business networks
- Distinguish between Value accretion vs. Value synergy vs. Value synchronicity
- Learn how value creation distinguishes between good and bad outsourcing
- Identify the qualities that enable value creation when outsourcing
- Learn how to evaluate value creation
- Learn key steps in value creation: Prepare report – Benchmark – Analyse variance and root cause – Analyse corrective actions – Forward planning
Chapter 12 – ROM in Japanese Shipbuilding
- Understand how ROM can boost business success with a historical case study of Japanese shipbuilding
- Learn who the mastermind behind Japan’s success was as well as his methods and ideas
- Understand how the shipbuilding industry illustrated ROM key concepts
- Understand the key benefits of ROM in shipbuilding, which can be applied across different sectors.
