8 Essential Practices in Supply Chain Outsourcing: Gartner Study

September 9, 2011: Supply chain management is a big deal as far as any business is concerned. If any company could not deliver the right inventory at right time with right quantity then it is quite difficult for any company to have a smooth functioning. Its not only about supply chain management, supply chain outsourcing is also pretty risky job. Today many companies focus on outsourcing their supply chain requirements to various service providers. But is it worthy to simply outsource. Before outsourcing, a proper study should be made to understand how to manage supply chain outsourcing partners. Gartner recently conducted a study on the most unavoidable factors to be noticed in supply chain outsourcing.

According to the study before outsourcing the companies should be very conscious and make a proper understanding of the threats and opportunities. The executives or authorities must leverage some major factors in Supply Chain Management Business Process Outsourcing (SCM BPO).

The eight essential practices required in Supply Chain outsourcing are:

1. Conscious about the outsourcing strategies

Before going for outsourcing the companies should have a proper understanding on the strategies adopted for outsourcing and also understand the corporate objectives very well

2. Be clear on your supply chain requirements

The company authorities must understand the basic requirement of outsourcing. They should also be clear on the scope of supply chain outsourcing – which supply chains to be outsourced and what to be outsourced in each supply chain.

3. Understanding your strengths

Before deciding on outsourcing supply chain one should understand the capabilities to plan, control and direct supply chain outsourcing

4. Assessing your level of maturity

Before deciding on outsourcing an internal assessment is required to learn whether the company is matured enough to adopt the facility of an outside service provider.

5. Core competencies

Selecting a vendor depends upon the core services in which the service provider is well versed to deliver and has more experience and innovative technological assistance then the competitor.

6. Not just cost effectiveness

Deciding on outsourcing your supply chain requirement must not depend only on availing cheaper cost benefits. It should also depend on strategic and tangible factors to avoid future problems

7. Understanding corruption

The company which decides to avail the benefit of outsourcing supply chain requirement must make sure that they should not get into a contract with a corrupted vendor. Problems created by identity theft and such issues should be noticed before outsourcing.

8. Regular flow of data

Weekly communication with the vendor regarding data and information is required. Key importance should be given to inventory levels and master data for smooth flow of information between the company and the vendor.

Last but no the least the supply chain executives should also track service levels. More over that should also look into the key performance indicators. Supply chain management and outsourcing is a very crucial factor in business, basically in manufacturing sector. The companies should give more importance while selecting a vendor.

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