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