Outsourcing the SC

It’s becoming possible to buy, off the shelf, practically any function required to run a company

Why Outsource?

Workers suddenly face a grave new threat, with even highlyeducated professionals having to compete against throngs of

hungry college grads in India, China & other developingindustrial markets willing to work twice as hard for one-fifth the pay

•“Transformational Outsourcing”

•Right Sizing

•Re-Engineering

•Rationalization

•“Totally Disaggregated Corporations”

“The issue is that if you don’t do it, you won’t survive”

Why Outsource?• Estimated that $19 billion in global IT &

$12 billion in business process services have been shifted to outsourcing

• Estimated that just one-tenth of potential global outsourcing market

• Technology, Communication, Education & Customer Demands

Strategic Decisions:-Influencing Business Strategy?-Connected? -Adapting? -Working as a “TEAM”?-Communicating?

Risks-Change -Management-Time -Money-Resources & Assets -Quality-Social / Environmental -Processes

Outsourcing should result in a “sustainable competitive advantage”

Why Outsource?• Speeds-Up:

-Innovation / Technology / Automation

-Re-organization / Re-Structuring-Funding New Projects-Change

• Accelerates Strategic Initiatives• Turn-Around Dying Businesses• Competitive Intel• Lowers:

-Operating Costs-Capital Requirements

• Replaces Inadequate: -Knowledge-Expertise-Skill Sets

‘Business schools must train future leaders to manage the virtual globally distributed

corporation’

What is SC?

Procurement Engineering Mfg. Whse. Transport. DistributionCustomer

Care

Strategic Management

Quality Mgmt.&

Logistics

Acquisition Transformation Delivery

“In future, firms won’t necessarily compete against other, instead entire supply chains will compete against each other”.

• Poor: -Operational Efficiency-Operational Effectiveness-Lead Time-to-Market-Economy-of-scale-Asset Utilization-Labor Utilization-Poor Organizational Structure

• Repeatable Processes• Non-Proprietary• Easily Measured Performance• Centralized Activity• Low Risk• High Volume

Keys to Outsourcing?

“As rising global costs equalize & dissipate savings from outsourcing, sustaining future

competitive advantage will require leveraging global talent in transforming companies &

industries, hopefully creating better jobs for everyone”

Outsourcing SCSupply Chain

-Logistics -Procurement

-Engineering -R&D

-Manufacturing -Quality

-Warehousing-Transportation

-Distribution -Customer Care

•Approx. 60% - 80% of sales revenue is managed by SC Activities

•Enormous gains in efficiency, productivity, quality & revenues achieved by leveraging outsourcing

“Don’t tell me how much I can save, buthow I can grow my business by 40%

without increasing capacity”

Outsourcing the SC

Thank You