The SCM Ecosystem - Strategies for Successful SCM BPO Operations (Part 3 of 3)
Organizations planning on SCM BPO need to first recognize the fact that unlike traditional BPO, SCM BPO is more about reducing COGs and improving operational efficiencies and NOT about reducing supply chain headcounts.
Keeping this in focus, a roadmap for successful SCM BPO operations should include the following factors/strategies:
- Focus more on outcomes and less on operating costs - i.e structure contracts around savings in direct material costs, reduction in inventories, improvement in COGS rather than SGA costs such as FTE costs
- Choose service providers who can provide end-to-end supply chain services by seamlessly integrating with downstream and upstream supply chain partners
- Develop specific industry expertise in the supply chain - for e.g the automotive industry would require a specific skillset in managing the supply chain vis-à-vis the CPG or Healthcare industries
- Conduct assessments or diagnostics to arrive at potential gains from SCM BPO before launching full-fledged services - for e.g an assessment of inventory and potential gains in terms of DSO, working capital etc will help decide whether a fully operational CIOG Managed Service (Centralized Inventory Optimization Group) is justified
- Utilize Centers of Excellence (CoEs) to conduct diagnostics, standardize and transition processes as well as provide quick ramp up capabilities
The starting point for SCM BPO will be in analyzing the SCM landscape, identifying processes which provide the maximum promise from outsourcing and finally prioritizing the processes in a well-defined roadmap. Integrating this with strong supply chain consulting services and governing it with business outcomes will be the way forward in building a successful SCM BPO operations.