InsideUp B2B Sourcing Blog


What Activities Should You Outsource?

Jul 1, 2015

By:  Arlette Measures

If you’ve decided to start outsourcing in order to save money and increase efficiency in your business, the next decision is where to begin.

Choosing the right processes to outsource is a very important part of a successful outsourcing strategy.

Start by doing a thorough analysis to assess your company’s core strengths. These are the activities that add value for your customers and/or set your company apart from the competition.

Value Chain

Harvard Professor Michael Porter introduced the model of the value chain in his 1985 book Competitive Advantage, in which he identified a typical company’s primary and support activities, as you can see in the diagram.

You can easily identify your company’s key strengths by thinking about which processes are directly related to creating and delivering your main products or services. Consider also, processes in which your company excels. These are the areas you will want to keep in house.

You might want to conduct a brainstorming session to help create a list of core competencies vs.  activities that could be better performed by an outside company.

You can break this down further by analyzing tasks within your core areas to identify those activities that do not add value or do not create a cost advantage.

Other factors to consider are whether handling a certain process in house would require a significant investment in equipment; also whether the activity carries risks that would be better handled by an outsourced provider.

Click here for a free business analysis and instant recommendations on which services will help you grow your business.

 



Outsourced Relationship Management Could be Key to Success

Jun 19, 2015

By:  Arlette Measures

According to Everest Research Institute, “Outsourcing is moving from a point solution for a few situations to a common business practice.”

Increasingly, businesses are using the services of several outsourced providers to perform a range of vital functions.

In one study by Vantage Partners, at least 15 percent of the total outsourcing contract value was determined to be at risk if outsourcing partnerships are not managed well. Clearly, a supportive partnership between your business and its service providers requires effective relationship management. Conversely, spending inordinate time and resources  monitoring multiple outsourced relationships will significantly reduce the benefits you can expect from outsourcing.

In the book, Multisourcing, analysts from research firm Gartner tell us that successful outsourcing is built on “a network of relationships, not transactions,” and that outsourcing governance is the most important factor in determining the success of an outsourcing engagement.

Many companies, however, have yet to implement a formal sourcing strategy that includes suitable outsourcing governance mechanisms. Working with an outsourced relationship management service can be the ideal solution to this problem.

Companies with limited needs and few providers may choose to work with an individual, whether in-house or outsourced, but businesses that need to manage several outsourced providers may want to look at companies that provide ORM services. A future article will provide tips for choosing an outsourced ORM service provider.