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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February 27, 2013

How can failed contracts be avoided? Active Contract Management is the answer

Industry studies indicate that as much as 9% of the bottom line is lost due to poorly written or executed contracts. How can failed contracts be avoided?  Through active management of the contract.  Here are some steps...


Scenario:  The sales team spends months winning over the client and then it takes another two months to close the contract.  Within twelve months the client is dissatisfied and lodges a formal contract dispute. 

This scenario is not uncommon. Industry studies indicate that as much as 9% of the bottom line is lost due to poorly written or executed contracts. A tremendous amount of energy is front-end loaded, and then the negotiation team disbands and hands over the contractual commitments to the implementers (who may not have been involved with the negotiation). 

How can failed contracts be avoided?  Through active management of the contract.  Here are some steps which can be taken to minimize risk and optimize profitability:

  • Documentation of contract risks and obligations
  • Assignment and tracking of obligations to identify risk
  • Creation of a contract scorecard which identifies areas of business and legal risk
  • Collaboration between client/supplier facing stakeholders with the contract management team.  The contract will require interpretation, regular status updates and changes over its life.

Infosys' LPO team can assist our clients with all phases of the contract life cycle-from contract drafting, playbooks (pre-approved by legal), summarization (abstraction), data base management, risk analysis/reporting, obligation tracking, and more.

Today's market is more competitive than ever and resources are limited.  Our clients can realize tremendous value by partnering with us to administer the contract over its life.

February 22, 2013

Why are ESS adoptions low? You need more than a portal...

User interface for business systems have long been a point of argument. When people can use Facebook without a help file, why should systems that we use in office make us cringe?


I heard an interesting anecdote recently. A famous hiring firm was contracted to consult and improve hiring for a large multinational company. The client had a sophisticated Applicant Tracking System. The system also had an internal referral portal where employees could refer friends. One of the constant complaint was that people were not exploiting the portal to refer. The HR head had sanctioned budgets to improve employee branding internally. The consultant had an inkling that the problem could be somewhere else. He offered to do a small survey with the users and then use the system to check it out.

Here were some interesting revelations. The company had more than 200 openings at that time. Unless exact fields were matched, the system could not throw the job profile that many of the employees would want to refer their friends. Being a non-critical engine, simultaneous log-ins was also limited by the IT dept. So chances were high that when you log-in to the system, it would have maxed out. And even when a criterion matched, the system required nearly 25 compulsory fields to be filled in before you can upload the resume. The entire procedure would take more than 30 minutes. And when you started filling the forms, in case fields did not meet a criterion, it will return an error on submission. Therefore, when someone thought of a referral and encountered the system challenges and complexities, they would postpone entering the details through the portal for later and eventually day-to-day work would take priority and resumes were never referred.

As an experiment, the consultant offered to create a new kind of a referral page, where someone would just need to enter the LinkedIn profile of their friends with a phone number / email credentials to contact. Just TWO plain BIG fields. In the backend, someone from the HR would call the candidate and find out the relevant details. The management agreed to pilot this reluctantly. The results were amazing. The referral rates increased multifold. And the positions closed through referrals were at an all-time high in 3 months.

The consultant had a tough time convincing the management to do this though. The management had never even questioned the system's efficiency as the financial investment and implementation time involved in developing the system was high. However, the power of automation with the subsequent saving of manpower was alluring. Also the idea of employee self-service and empowering the employees were all standard industry benefits that could not be ignored. The business case was really strong. Even the HR head agreed that it was a challenge to refer through the portal and asked his secretary to enter most of the fields!

User interface for business systems have long been a point of argument. When people can use Facebook without a help file, why should systems that we use in office make us cringe? After spending millions in implementation and training, adoption rates can still be an issue for business systems. The problem lies from not looking at the users in the first place. This is where social engines really take the lead.

Look around; most systems are called HR systems, finance systems, claims systems, tracking systems. They are designed the way companies are organized, rather than the way the users are organized and work. The product thinking should go through a paradigm shift. And the first signs are already on the horizon. But here is the interesting challenge. When you build a system like that, who will you sell it to - Finance or HR or Operations? Unless someone bells the cat and are willing to take the jump, business systems will continue to be built around the buyers rather than the users. Small and medium enterprises will lead the way in this.

It is little wonder that ESS adoption have been low. Share any interesting experiences that you may have in this area.
 

February 19, 2013

Logistics Claims....can BPO help?

The common refrain when it comes to managing claims due to damage during transit, is that the process is time consuming and returns meager for the effort expended. Here's where BPO could step in and provide support.


In most discussions on transportation management, the common refrain when it comes to managing claims due to damage during transit, is that the process is time consuming and returns meager for the effort expended.  Deciding to investigate this a bit further, I asked one of our clients, a leading manufacturer of packaging material, as to the major concern he had about logistics claims that had a disproportionate impact on business. His reply was intuitive and covered two basic points:

    1. Valid claims from a customer being rejected leading to a customer dissatisfaction
    2. Invalid claims being accepted and paid out resulting in revenue loss to the company

Obviously the first point on customer dissatisfaction was the major concern since the low value of invalid claims being paid out made revenue loss minimal compared to the risk of valid claims being rejected. For instance in this particular case, 65% of logistics related claims were paid out and the remaining rejected since they were FTL consignments which typically in the US are not liable for claims.

A sore point that was bought up was that this 65% of the claims involved time consuming work in terms of creating claim forms, coordination with customers and carriers to obtain POD (Proof of Delivery), required photographs of damaged material and all other collateral to investigate and validate a claim.  Typically considering the small amounts involved, carriers/customers ignored these requests but wanted a quick resolution either way.

Here's where BPO could step in and provide support in the processing of a logistics claim

LogisticsClaims.png 

Though the volume of claims would be low and not justify the placement of resources dedicated to managing logistics claims, this could be made a part of the order management and fulfillment team, thus providing end to end services. Benefits would be better management of claims with higher recovery rates from carriers and lower customer dissatisfaction in the claims handling process 

February 13, 2013

Making the Ulrich model work

The Ulrich model works and works very well. What has gone missing is the willingness to examine the structure every once in a while and make course corrections to adapt it to the growing needs of the business.


Much of the HR Shared Services model today owe their existence and evolution to the great work of Dave Ulrich almost a decade back. With the Business Partner HR model with a backend support layer, HR was now given the mandate to strategically partner with Business. All the best practices could now be handled by specialized skills in the Center of Expertise. This model has been a great success though the flaws in consistent implementation as also the changing business landscape have made practitioners question its utility.

Businesses have evolved in the last 10 odd years. They have grown in scale. They have gone global. The dynamics of talent has changed. Technology has evolved. And the challenges of the day-to-day management of the dynamic environment calls for a certain agility that could not wait. Slowly, many sub structures evolved in the classical model to accommodate for the larger, regional or immediate requirements. Some of the functions required immediate intervention. The idea of a centralized faceless back office was often replaced with a quick fix, a guerilla organization, and an affordable technology. Today what we see in many companies are variations of the original model.

In our practice as a HR Service provider and a trusted partner, we are often called upon by our clients to examine why these aberrations have emerged and often the clients tell us its because of the failure of the Ulrich model. In our view its not the failure of the model. The model works and works very well. What has gone missing is the willingness to examine the structure every once in a while and make course corrections to adapt it to the growing needs of the business. The  balance between shared services, business partner/regional HR, centers of expertise and corporate HR needs to be tightly maintained to ensure efficacy of HR shared services as also maximum value.

Ulrich model implementation cannot and should not be viewed as a one time implementation. It should be viewed as an annual exercise that calibrates the model with the evolution & changes in the business, the additional complexity and the changing demands of the clients/employees. Only then will the rigor be maintained and will the business gain maximum leverage & value from HR.

February 6, 2013

Brazil: the Big B in BRICS BPO

With a population made up of a mix of immigrants from across the world who still retain their language and cultural specifics, it's a dream labour pool for a prospective BPO center.


On a recent trip to Brazil, the first thing that struck me on landing in Rio de Janerio  was the sheer cultural diversity of the country. With a population made up of a mix of immigrants from across the world who still retain their language and cultural specifics, it's a dream labour pool for a prospective BPO center. Out of a population of 190 million, the demographics include:

18 million German Brazilians

15 million Hispano Brazilians

25 million Italian Brazilians

10 million Arabic Brazilians

1.6 million Japanese Brazilians

...and the list goes on showcasing a demographic dividend that can rival India's in age and surpass it in terms of cultural specifics for the target BPO markets of the West and emerging markets in APAC and the Middle East. This demographic dividend is further compounded when one realizes that 83% of the population lives in urban centers with a significant part of them having college degrees. For instance in the 3rd largest city in Brazil, Belo Horizonte, 22,000 graduates pass out every year.  The BPO industry in Brazil is still small at $ 4.7 billion but is poised to grow exponentially in the next few years becoming the big B in BPO and a must have location for both BPO vendors and customers.

February 1, 2013

Sourcing & Procurement in the Pharma world

For a long time the pharma industry has delivered high profit margins banking on patented and innovative products. However, times have changed now since generic drugs have started entering the market and emerging markets have started gaining prominence.


I took my 1st steps in the corporate world in the sourcing & procurement department of a leading Indian pharmaceutical company. Life has come a full circle now as I work in the services sector designing sourcing & procurement outsourcing solutions for customers including leading global pharmaceutical companies. I have moved from being in the client's seat dealing with raw material suppliers for the pharma industry to the opposite side of the table being a supplier of outsourcing services to pharmaceutical companies. The domain still remains the same - Sourcing & Procurement, however it has evolved over the numerous years.

For a long time the pharma industry has delivered high profit margins banking on patented and innovative products. However, times have changed now since generic drugs have started entering the market and emerging markets have started gaining prominence.

The procurement department has started gaining much more attention as companies look at more and more avenues for cost reduction & increasing efficiencies. This focus has been attained due to the fact that procurement accounts for about 50-60% of the total cost to pharmaceutical companies.

The pharmaceutical sector has a high level of sourcing & procurement maturity with respect to its direct spend. Spend visibility and control over categories such as APIs, intermediates & excipients is high. However, the indirect spend area is still gaining maturity as compared to the maturity levels in the automotive & retail sectors. The indirect spend in the pharmaceutical industry does constitute of categories such as facilities management, MRO, IT,R&D, freight & distribution, travel, marketing & sales, personnel and professional services etc. like many other industrial sectors.

However, the spend on R&D category in the Pharma sector is quite high as compared to many other industries. In categories such as these which require a high amount of technical expertise (sub-categories like: clinical trials, analytical equipment etc.), the procurement department was considered to be only a support system rather than a strategic partner. However, transformation initiatives are being taken up by companies and cross functional teams are now being formed for such kind of sourcing projects where the subject expertise is provided by the R&D personnel and the sourcing manager concentrates on negotiating the required KPIs & SLAs at the best possible price and terms & conditions. Collaboration between these functions has increased considering that the R&D phase of a drug/molecule is a costly affair and the choice of a wrong supplier at this stage & changing it later would result in the reduction in the effective use of the patent life & a delay in market entry, for which the company might have to pay a heavy price.

Besides forming internal cross functional teams, the concept of collaborative sourcing is also on a high, especially for categories such as packaging materials where pharma companies work hand in hand with their specialized packaging suppliers to tackle issues such as counterfeit drugs. Of course, such kind of relationships are based on a high amount of trust by both the parties.

R&D activities sometimes require adequate supply of hard to source materials. The quantity might be less during the development stage of the product but as it moves onto the pilot and then to the production stage, the requirement might increase exponentially with tighter specifications, GMP standard requirements and regulatory compliance. Hence, R&D specialists have realized that involvement of the sourcing team early on during the new product development, leads to lesser problems later. Due to this , they are also able to concentrate more on their subject matter & leave the vendor search & development aspects to the sourcing team.

Pharma companies have realized that in the bid to attain more cost savings & increased efficiency, indirect materials also need focus apart from the highly strategic direct materials. Hence, clearly defined procurement policies, supplier relationships, volume consolidations, specifications harmonization, TCO models, e-procurement solutions etc. are some of the strategies which have emerged in the indirect categories domain as well.

What are the challenges or peculiarities that sourcing & procurement faces in your industrial sector? Let's continue the discussion.

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