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Outsourcing in supply chain – a unique way to deploy global supply chain programs

This is based on my recent project experience with one of the leading networking companies in US, which is running its strategic supply chain performance improvement initiative globally. Usually, companies tend to implement such initiatives as a pilot for a select few customers and markets and once the pilot is run for a certain period of time, it is rolled out to other areas incorporating learnings from the pilot phase. The rolling out of such strategic initiatives to all the markets globally is imperative to achieve the desired financial benefits, finally leading to revenue and profit growth.  The key is the global execution that becomes a real challenge in a global scenario, especially when it demands a significant amount of investment in terms of time, cost, talent and effort from teams located regionally.

The usual reaction could be to hire and train resources locally that might work in the near term but it has its own set of challenges. The leading organizations look for opportunities outside and do the cost-benefit analysis of various approaches before selecting the right approach for its own set of constraints and requirements. One of the unique approaches is to partner with a service provider such as Infosys to roll out its initiative in other markets. This is similar to a typical “outsourcing and offshoring” model but it is different and unique. It is different because the drivers are not just cost and quality of execution but accelerating the earnings by deploying the initiative faster in other markets. And, it is unique since it is not just restricted to transactional activities but goes beyond it to include some of the semi-core supply chain activities. This approach helps the client in out-tasking the components that help them in scaling the strategic initiative, while at the same time retaining the core components and executive decision making. The service providers must have the desired capability to support the client in scaling up and deploying these initiatives in the desired markets and geographies.  

This calls for a detailed assessment of client’s current initiatives and do a deep dive in evaluating sizeable chunks or activities that can be logically grouped as components. These components can be further analyzed on a variety of parameters such as its strategic importance (core vs non-core), dependency on location (region specific), risk and infrastructure needs. Once the out-tasked components are identified, the service provider can go ahead and deploy them in a phased manner.

I think this is an excellent example of how companies can exploit partner competency by out-tasking some of its supply chain components without compromising on the quality of execution, and thus deriving revenues at a faster pace.

This has been my first such unique experience. Comments and viewpoints are welcome. If anyone has a similar experience before, please do share your learnings.

Comments

I have been involved in several of these types of initiatives. A detailed assessment is critical to this being successful. Also a clearly defined set of use cases will speed up developmental time.

Well said. If you have any such experiences in supply chain domain that can be shared, please do so. It will also enrich my knowledge.

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