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OUTSOURCING - INSOURCING ACTIVITIES |
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COMPANIES & LINKS
BUSINESS ADVICE - AMERICA CENTRAL
INFORMATION
OTHER
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Outsourcing and insourcing activities Companies should continuously evaluate its organizations and investigate if organizational development is required. Tools that can be used in this process can be EFQM Business Excellence, INK Management, Business Process Management, Six Sigma etcetera.
Outsourcing to developing countries is a buzz-word and many companies are triggered to outsource activities to specialized companies and/or low-cost countries. If executed well outsourcing activities can be worthwhile and your company can become more profitable. However there are also many examples where outsourcing activities have been a failure and resulted in high losses, even bankruptcy. Therefore Business Advice - America Central and BA2C advice to analyze your situation before starting-up an outsourcing process. Business Advice America Central can assist your company in this process.
Main characteristics of Outsourcing
Outsourcing can be partial or turn-key. With turn-key outsourcing the responsibility of the total execution (including co-ordination) is with the (third) outsourcing party. With partial outsourcing part of the activity is outsourced while the co-ordination of the activities remains in general the responsibility of the client company. In both situations it is very important to have a clear understanding of who is doing what activity, who is responsible for what activity and service/quality levels.
Advantages of outsourcing
Disadvantages of outsourcing
Main reasons for outsourcing
Typical outsourcing process
Strategic Phase In this phase your company evaluates and investigates if, why and what activities can and should be outsourced (or in-sourced). Key drivers in this process are QUALITY, TIME and COSTS. During the strategic phase the competence and cost of the potential outsourcing partners will be assessed and evaluated according to pre-defined evaluation criteria. Based on this analysis & evaluation an outsourcing partner can be selected and contract negotiations can start.
Transition Phase During the transition phase the contracts between the company and outsourcing partners will be signed and activities will be transferred to the outsourcing partner. Some aspects that should be taken care of in the contracts are:
Operations Phase The operations phase consists of relationship maintenance and contract termination. During the contract the relationship between client and supplier should be maintained in order to make the outsourcing a success. Both partners have to work closely together in order to benefit from the outsourcing relationship. Without the specific outsourcing benefits Business Advice America Central and BA2C in general suggest to enter a "normal" client-supplier relationship. Therefore it is important that both parties are aware of the outsourcing objectives of client and outsourcing parties, implement good communication procedures, respect each other and gain trust between parties.
After the contract is finished/terminated it is important that the both the client and outsourcing parties can continue independently with each of the companies individual activities and businesses. Therefore during contract negotiations the termination of the contract including the disentanglement of the processes should be very well defined. If this is not taken care of both client and outsourcing parties risk lots of problems and costs and a discontinuation of activities, legal problems etcetera after contract termination.
Procurement Portfolio Analysis (Power of Client versus supplier/outsourcing party and visa versa) When defining what supplier relationship is best for a specific situation or if activities should be executed in-house Business Advice America Central and BA2C advice to execute a procurement portfolio analysis. This analysis provides information to define and develop a procurement strategy. In a procurement portfolio analysis the following aspects are evaluated:
In the so-called Kraljic Procurement Portfolio Matrix this information can be visualized. An example of the Kraljic Procurement Portfolio Matrix is presented below.
A Procurement & Supplier Portfolio analysis gives you an understanding of the relative power structure between client, suppliers and outsourcing partners. This understanding is in the view of Business Advice America Central and BA2C very important in order to be able to develop a procurement and outsourcing strategy. Four general basis strategies for procurement are:
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BA2C Office in the Netherlands Lange Poten 29 2511 CM The Hague The Netherlands Phone: +31 70 360 50 80 Mobile: +31 6 483 53 263
Business Advice America Central*: Guatemala.
* contact through: BA2C
Email: information@ba2c.com Internet: www.ba2c.com Skype: wfrens |
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Business Advice America Central Consultants of Business Advice America Central have assisted several clients with the preparation and implementing procurement and outsourcing strategy and outsourcing deals. In case you would like to receive more information or would like to discuss how Business Advice America Central can assist your organisation please contact Business Advice America Central. |
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