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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November 23, 2012

Digging for Digital Gold

Will the content companies make money looking for gold? - they will; but so also will the companies providing the picks and shovels and jeans.

While vagaries and nuances and mega-trends proliferate - today's Digital Consumer has consistently spoken loud and clear over the last several years.

I - the Digital Consumer - want (must have/demand):

Any content (Movies, TV Shows, Music, Sports Information, News, Pictures, Social Media ....)

Any where

(on) Any Device

(at) Any Time.

Period.

The (4) A's!

So what in the world does this have to do with a company such as Infosys BPO; as the Digital Consumer slogs himself/herself through the plethora of "stuff" - what nuggets lie within this that might be of interest to Infosys BPO?

The answer is - plenty!

Content Companies (think Hollywood Studios), Broadcast Networks and Cable Networks must provide a seamless, end-to-end set of services that enable the Digital Consumer to fully enjoy all of the experiences provided by these companies without thinking or doing anything that would be perceived out of their normal day-to-day activities.

And this is the opportunity for Infosys BPO - to design, build, and operate for our customers these services for the digital consumer.

Why look to an external provider?  The answer lies in the fact that while business models are becoming better defined and the skills needed to build and operate these services are becoming clearer and clearer - yet the ability to hire the necessary people and build and operate the infrastructure in this still chaotic environment is fraught with risk and peril. When such a situation is combined with the scarcity of capital it just makes sense to look outside for service providers with the core capabilities, established over an extended period of time - and the commitment and passion for this space - to provide these capabilities.

In the 1850's Gold was discovered in California making a lot of people very rich.  There were a lot of people who panned and panned and panned and never struck gold.  In looking back - where was the most money made?  Two companies come to mind.  One was Levi Strauss who made jeans for the gold miners - and of course - Levi's are still bought and sold all over the world today.  Another successful entrepreneur/service provider was the hardware company that manufactured and sold the picks and shovels and gold mining equipment for the miners - Leland Stanford was that entrepreneur who made enough to fund the building of railroads and to invest in what became one of the leading private Universities of today.

Will the content companies make money looking for gold? - they will; but so also will the companies providing the picks and shovels and jeans.

November 21, 2012

Managing Workplace Wellness - Go beyond Benefits Administration with your HRO partner

With increasing strain on healthcare administration, health and wellness initiatives have a huge social dividend as well. But, such initiatives require time, attention, effort and investments - all of which are difficult for HR in the current economic scenario. This is where an innovative HRO provider can fit right in.

According to Harvard Business Review (link) the returns on a comprehensive corporate wellness program could be as high as 6 times for every dollar invested. Case studies are emerging where strategic health interventions have reduced the burden on administering benefits for the employer. Further, wellness programs also contribute to better productivity and employee engagement. Reports indicate that companies with well-run programs have reduced attrition rates. Imagine a workplace where people have fewer lifestyle diseases, lesser time out because of illness and more energy. Who would not want that for their company?

In short, investment in employee health pays, and pays big time. This is a gold mine that could have a huge impact on Human Resources. Yet, wellness is a poorly explored area by corporates or by outsourcing providers in this space. Most often, wellness programs happen without a clear strategy, are in spurts and most of the initiatives are just imitations. This is not because of anyone's bad intent; but a lack of understanding in the HR World about what it takes to run a wellness program. I have the advantage of working both in the area of health and HR for nearly 6 years and often pondered on what it takes to run a good corporate wellness program. Things that come to my mind are - a strong intent, a clear understanding of the objectives, careful planning, fine execution, rigorous monitoring and diligent reporting. With increasing strain on healthcare administration, health and wellness initiatives have a huge social dividend as well. But, doing it in the above fashion outlined requires time, attention, effort and investments - all of which are difficult for HR in the current economic scenario. This is where an innovative HRO provider can fit right in. HR BPO providers can design and run the programs as a managed service and can be taken across to multiple clients; thereby passing on the benefits of scale to customers.

Are there any takers for this? Let me know your views.

November 16, 2012

The SCM Ecosystem - BPO Service Offerings (Part 2 of 3)

A key to identifying SCM BPO processes is to understand that SCM BPO will be a specialized BPO vis-à-vis traditional BPO in terms of its value proposition, commercial models,  enabling technologies and skill sets required.

Outsourcing production through contract manufacturers in local or offshore locations has been an accepted part of supply chain strategy and has developed its own systems and practices to become a mature operating model. SCM BPO on the other hand is very much in infancy and defining its scope and potential will be an ongoing process. A key to identifying SCM BPO processes is to understand that SCM BPO will be a specialized BPO vis-à-vis traditional BPO in terms of its value proposition, commercial models,  enabling technologies and skill sets required. SCM processes will offer a value proposition beyond labour arbitrage, commercial models will be focused more on outcomes than fixed fee and skills required will be very domain specific. The SCM BPO provider will also operate on his own set of specialized technologies or platforms and function in a complex network of alliances and partnerships to provide end to end services. Moreover some SCM BPO offerings will be one time project based services such as analytics as opposed to traditional annuity based services. Service offerings that have seen traction in the market can be grouped into the SCOR model as below:

 SCM_Eco_Part 2.png

Companies have been most active in the "Plan" set of activities in the form of outsourcing short term projects which are based on SCM Consulting expertise. The movement to extend these consulting projects into extended managed services is well underway - the Retail and CPG industry has for instance been early adopters of extending inventory optimization consulting services into a longer term managed service by setting by CIOGs (Central Inventory Optimization Groups) which monitor the inventory patterns and take corrective actions in real time to ensure the supply chain is continually optimized.

However we see that SCM BPO certainly requires a shift in mindset to execute and deliver successful operations. Some imperatives will remain whereas other new capabilities will have to be built up - in the next post we'll discuss these capabilities and factors to be put in place while planning for a successful SCM BPO implementation.

November 7, 2012

Procurement and Social Media: the Long Awaited Love Affair yet to Bloom

Social media has unquestionably become a very powerful platform which the businesses can no longer afford to ignore. Companies have extensively indulged in the love affair called social media to market products and services, inform about new products being launched and obtain customer feedbacks. But it seems that the marriage with more complex functions like procurement is still not consummate.

This is no brainer that times and lives have changed and so have the ways of doing things. The iPhone/android generation of today has shifted towards a smarter, quicker and much faster way of making things happen enabled by cutting edge technology and mobile communication.

The social media permeates every aspect of our lives, more so with the advent of smart mobile technology and apps which allow round the clock access to a plethora of online information, updated by the minute.

No more is the technology associated with the techno geeks, but with those who are smart and informed and rightly so, from ordering your tickets and buying fashion wear online to getting RSS feeds on topics that interest you, reading restaurant and product reviews and talking to your leaders on the latest socio/political issues to best deals, the world has definitely shrunk to a palm size of convenience.

We are living in an alternate realm of a virtual life where we share, connect and form opinions through tweets, status updates, share feedbacks about our moment of truth with numerous products, customer services folks of companies, all facilitated through shared social, technology enabled networks.

Many social media analytic sites like Adobe® Social Analytics and Klout have evolved that measure your online impact and influence and are also being engaged by various companies worldwide to monitor and analyze the pulse of their products and services. All these turnarounds have made the social media not just dynamic but actionable for businesses.

Social media has unquestionably become a very powerful platform which the businesses can no longer afford to ignore. Companies have extensively indulged in the love affair called social media to market products and services, inform about new products being launched and obtain customer feedbacks. But it seems that the marriage with more complex functions like procurement is still not consummate.

The Social media and the CPO of today have so far been on the tangent, their most common excuse being "Social media is for selling and we are buying, we don't need social media", my prior experience of working with a public procurement body speaks that by accessing social media networks, a company or an organization can get access to information related to products and services and get connected to emerging markets, new vendors and alternative products. It can be leveraged as a very powerful tool for obtaining more cost and time effective and efficient market intelligence and supplier risk data.

The forecasts in terms of shifting Socio-economic-political scenarios across the world can be early warning indicators to help CPO sail over the crisis situations like supply chain disruptions and delays by helping a CPO to visualize early on potential threats and devise mitigation strategies. The same applies for gaining visibility of the emerging markets and improving your visibility across these markets as a strong buyer.

The procurement fraternity has always been marred with allegations of ambiguity under the garb of confidentiality. Many procurement anomalies being hot topics for discussion by various groups on LinkedIn and sites like Spend Matters. Companies and public Procurements bodies have mandates from EU, FCPA and other regulatory bodies across various geographies to build strong evidences of transparency in any buying activity. Is there a better way of addressing this, than running e-Sourcing completions on tools like Ariba Sourcing and integrating it with social media platforms to convey in the right markets, the ongoing RFXs/competitions and getting a wider expanse of suppliers to be aware of it. Supplier's and service providers can subscribe to a company's RFX tweets, RSS Feeds and apply online. This enables greater transparency, faster collaboration and two-way visibility for both the buyer and the supplier and also weeds out any accusations of a preferential and biased treatment from vendors/government agencies etc.

On a different note, social media could be deployed in terms of engagement with peers. Various blogging sites like Ariba Exchange or intranet boarded closed group platforms, next level purchasing have a great following of middle to senior level professionals sharing knowledge, best practices and even run commodity councils on them. Professional networking sites likes LinkedIn connect professional across the supply chain and can also help tap the right resources across the Sourcing and procurement domain. Many of the techno social tools have already entered the mainstream, eProcurement/eSourcing are leading the pack of procurement transformation initiatives.

Social Media can therefore be the prospective partner; a CPO can depend on to achieve dual benefit of getting access to the market and also making the market aware of his company's requirement and upcoming sourcing projects.

The time is ripe for this alliance to be arranged. Will await your comments in case you feel otherwise or have experienced any benefit/have used social networks innovatively to your advantage.

In my next blog we will explore specific social media tools and sites and run a feasibility test on them from a procurement professional's perspective.

November 2, 2012

The SCM Ecosystem - the Service Providers (Part 1 of 3)

Outsourcing of production and logistics has become a firmly established model for growth and cost competitiveness in the global markets of today. Can outsourcing of SCM processes be far behind?

Supply Chain Management is often seen as a core function within organizations and seldom do supply chain executives feel that these could or should be outsourced. However the slow morphing of most manufacturing companies to becoming design and marketing organizations with the actual production being taken over by contract manufacturers in low cost countries contradicts this view. Outsourcing of production and logistics has become a firmly established model for growth and cost competitiveness in the global markets of today. Can outsourcing of SCM processes be far behind?

The BPO industry has achieved considerable maturity in delivering transactional processes in Finance and Accounting, Customer Service, Travel and Expense etc. This learning curve has helped the industry to scale up and perfect its delivery models. The next wave of services will be in delivering value added services where knowledge/skill and improved business outcome is the promise rather than the earlier focus on labour arbitrage.  SCM and Analytics will play an important role in the future of the BPO industry and its sustainability over the long run. To understand the scope and potential of SCM BPO we will need to first understand (1) the service providers in this space, (2) the processes that clients are looking at being delivered from a shared service center and finally (3) the operating strategy for successful SCM operations.

(1) The Service Providers:

SCM_Ecosystem.png 

Contract manufacturers:
Most manufacturing companies today retain R&D, design, local assembly and marketing while production is outsourced to contract manufacturers. These manufacturers in low cost locations like China utilize the same levers of BPO such as labour arbitrage and economies of scale to deliver cost benefits to the client. Contract manufacturers may operate under a license or under full control of the outsourcing organization with pre-agreed rates and margins for services delivered. Celestica and Flextronics would be good examples of successful CMs for the electronics industry

Logistics Service Providers:
Movement of goods, information and cash is provided by LSPs which would include management of warehouses, freight and payment channels. The physical movement of materials is accomplished with an asset heavy structure by 3PLs like UPS or DHL. Another alternative could be LSPs which simply manage processes which do not require physical movement of goods such as customs clearances and freight forwarding (some examples being C.H Robinson and Ceva). A 4PL on the other hand will be able to manage a set of 3PLs using a asset light model by providing services such as selection, evaluation and management of 3PLs, freight auditing and billing, route optimization, vendor negotiations etc. It is in this space that some LSPs have begun to offer traditional BPO services and offer stiff competition to BPO vendors. However the BPO component of services offered by LSPs is typically small and focused on a narrow set of processes such as logistics helpdesk and freight billing

Independent Software Vendors:
Supply Chain application and ERP modules provided by ISVs are an important component of the logistics value chain. Besides standard packages in SCM and CRM from majors market players like SAP and Oracle, niche offerings are available from IT vendors like JDA, Manhattan Associates, Netstock etc. These ISVs also provide cloud based services or SaaS (Software as a Service) in a multi-tenant model to reduce the capex for their clients and to make their services more affordable. These managed services on the cloud are in close competition to BPO vendors. However these managed services are typically restricted to the software associated with the ISV and rarely does it encompass service delivered on a competing platform or a technology agnostic service 

BPO Vendors:
SCM BPO has now moved beyond the F&A domain (S2P and OtC) and currently offers a series of services that encompass technology, consulting and deep domain knowledge. These services typically seek to optimize the supply chain and less on labour arbitrage. These may range from optimizing processes such as S&OP or demand forecasting to services which are currently not available with the client such as SCM Analytics. However it is clear that BPO vendors will need to span the SCM ecosystem and integrate with all SC partners to deliver an optimized supply chain. Hence an aggregator model with strategic alliances to cover contract manufacturers, LSPs and ISVs is imperative - this will be key in positioning SCM BPO as a key differentiator and provider of end-to-end supply chain services

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