Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Outsourcing (BPO) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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July 30, 2012

How to get the best piece of the emerging economy pie

With unfamiliar territory come familiar apprehensions. And, these apprehensions are manifold for large and relatively smaller organizations. Overriding these is the fact that the moniker "emerging market economy" (EME) brings with a certainty of profitability that the traditional economies are faltering with today. And, adding to this will be innovation -- a success driver in the new world order and emerging economies.

In its July 2012 forecast, Ernst & Young identified emerging market economies (EMEs) as "rapid-growth markets," for good reason. While the Eurozone struggles to get through its crisis, EMEs are expected to not only survive this, but will also consistently expand until 2013 -- when expansion is expected to accelerate.

Countries such as India and the Philippines are now considered centers of excellence for outsourced services in a number of domains. They are an integral part of the global value chain. The promise that the EMEs hold is not limited to its potential contribution to rationalizing the service delivery process. Their vibrant economies are also fueling consumer market expansion. For example, in 2011, Emerging Asia accounted for 14% of the total global spending. By 2020, Emerging Asia's share will increase to 25%, and further increase to 40% by 2030 (Ernst & Young, 2012).

Overall, the numbers are looking good for EMEs. Aside from making up 81 out of 192 countries, and 80% of the global population, EMEs also contribute 53% to the global GDP, 70% of foreign exchange, 12% of the world's equity market capitalization (Forbes). Collectively, these economies are growing at a rate of 4.9%, about thrice as much as the G7's growth rate of 1.4% (Ernst & Young, 2012).

There are, of course, risks associated with moving in to unfamiliar territory. Many multinationals that have made the move to EMEs were able to mitigate the risks and ensure the results through innovative outsourcing. This involves getting a partner with an intimate knowledge of the market and the domain expertise to get things going so you can focus on the front end.

For businesses which are looking for expansion in terms of process, cost realization, or market expansion opportunities it is time to come up with an EME strategy as a driver for growth. It is time you get your share of that pie.

July 20, 2012

Preserving Knowledge over centuries -- Insights on Knowledge Management from cultural practices, for corporate benefit

Sometime back an acquaintance shared an interesting incident. He was the General Manager at a large industrial unit and was given the responsibility of heading a committee that was building a temple in the factory premises. Being an engineer and a manager, he was intrigued to find out how the traditional builders would go about the project. On the appointed day, the Stapathi (the traditional temple architect) arrived at the project site with his assistants. After an evaluation, he started uttering a set of instructions which was in Sanskrit to his assistants. The assistants who seemed to understand the code just nodded their head. There was hardly any notes of blueprints taken. In a few months, the temple came up with every mason exchanging standard sets of instructions to others in codes that was hardly understood by the engineers sponsoring the project. All they could decipher was these were some kind of 'Sutras' that was passed on from generation to another.

As a learning designer, this got me thinking. I researched a little on Wikipedia. At the first level, I found a Sutra is an aphorism or a rule or a formula. And also found that the sutra had the following attributes as defined in one of the scriptures - "Of minimal syllabary, unambiguous, pithy, comprehensive, continuous, and without flaw: who knows the sūtra knows it to be thus." This became even more interesting as I am aware that a vast body of experts across the world had been trying to do this for the learning world through standards like SCORM (Sharable Content Object Reference Model). As I researched deeper, I found that vast bodies of knowledge across astronomy, medicine, mathematics, metallurgy, engineering, arts etc. have been preserved this way, some running into thousands of sutras. And each of sutras is connected to the next in some logical sequence.

This method of preserving knowledge in small capsules has saved precious knowledge in the absence of a formal schooling system/written repositories for thousands of years. I found the design of the sutras very intelligent. Corporates would benefit a lot to investigate more on such structures that has stood the test of time. I am imagining that if we define a structure to store processes, methods and steps in a concise, discrete and complete manner (just like sutras) - we would have created the DNA for a knowledge object. This could then be used to store vast bodies of knowledge inside the organization. Would be glad to hear from others on further interesting aspects or insights regarding this. I am already experimenting with it in some of the programs that I am trying to create.

July 16, 2012

Rise and fall of the Purchasing function - how can it stand firm?

Even reasonably experienced buyers are working with a mixed bag of results e.g. savings are achieved but not on time delivery; all supplier performance scores are good but stakeholders are still complaining...

Ever tried predicting the most likely answer when you ask reasonably experienced buyers, "How is it going for you in the purchasing area?" I consciously tried to keep a simple record for the answers I got after listening to over 200 folks so far. The most common answer I found sounded like this "We keep on doing good and not so good at the same time". The answer sounds so vague and nebulous - doesn't it? Or are our dear friends struggling to articulate a right answer to such a simple question?

Further questioning provided clarity. What they tell is usually right and yet paradoxical. Most of them always work with a mixed bag of results e.g. savings are achieved but not on time delivery; all supplier performance scores are good but stakeholders are still complaining etc. But why does this happen? Why can't each performance parameter look green/100% achieved in their BSCs? It is usual to see tactical responses to this e.g. our demand keeps on changing so much without warning; our suppliers are doing their best but still.....etc.

Actually the answer is simple. It's all about building & sustaining all the required capabilities. A famous HACKETT 2010 report titled Procurement Capabilities - The DNA for procurement value addition, lists 300 capabilities that were found as causal factors behind getting a particular performance level (an effect) that is measured.

Seek external help or do it yourself to build these capabilities on a sustainable basis. Till then - difficult to keep rising (favorable) Purchasing performance levels. Bon Purchasing!

July 4, 2012

Making procurement savings count

Essentially industry benchmarks have been used to derive contracted savings which are then realized in the sourcing lifecycles of any sourcing projects. These savings can be termed and bucketized under "Sourcing Optimization". But the other side of the coin is the procurement savings which predominantly lies with the P2P technology implementation and compliances.

Whenever we use the word "Savings" in the sourcing and procurement world - 9 out of 10 times it is considered for sourcing savings -- what we typically achieve by managing various categories strategically. Essentially industry benchmarks have been used to derive contracted savings which are then realized in the sourcing lifecycles of any sourcing projects. These savings can be termed and bucketized under "Sourcing Optimization".

But the other side of the coin is the procurement savings which predominantly lies with the P2P technology implementation and compliances. Gone are those days when clients used to only talk about the sourcing savings as now even the procurement is being measured in terms of its "savings potential" and these savings are very critical. Clients expect that the P2P savings should also be put under risk or under a gain share kind of model.

The key levers to arrive Procurement savings can be bucketized in two major buckets which are: 

  • P2P channel optimization driven by technology enablement (procurement platform deployment, catalogue enablement)
  • Compliance and automation driven by stakeholder demand management, consolidating purchasing requests and intervals, reviewing stock levels, expanding current contracts, pricing compliance, goods receipt compliance, replacement strategies, supplier terms  invoice matching effectiveness and early payment discounts

However, we also need to be cognizant of one important fact that P2P channel takes payables also into account and overall P2P savings can only be realized and sustained when procurement and payables have a tight integration.

So when we achieve these P2P savings, these are not dropping in between due to any leakages, and gets realized during the entire P2P lifecycle.

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