Direct materials functions are often on the borderline of supply chain management or procurement outsourcing with the borders blurring even further in some cases. When functional elements like environmental safety and health, vendor management inventory, general supplier management, supplier compliance and materials management are introduced, it becomes hard to figure out to which category these functions actually belong.
Everest Group has now released a research report which attempts to define supply chain management BPO and procurement outsourcing and clearly demarcates the two.
Everest Group is an advisory firm offering their services to business leaders helping them improve the performances of their firms through optimizing middle office and back-end operations.
The research report from the advisory firm helps in clearing the fuzziness surrounding certain areas of both types of BPO. For example, some services of Achilles such as qualification, auditing, certification, supplier on-boarding etc. seems to come into both the categories.
With the help of the research report from Everest group, it becomes easier to classify these functions.
Defining procurement outsourcing and supply chain management
In the report titled ‘Supply Chain Management (SCM) BPO- Beyond Procurement Outsourcing (PO)’, the research group delves into finding a clear separation between procurement BPO and supply chain BPO. The research was headed by Saurabh Gupta who, along with his colleagues, seems to have analyzed the supply chain market and direct materials well.
The report has focused on certain specifics of the supply chain management BPO market such as RAC, MDM and deliver. In addition, the team under Gupta has managed to define it as well.
The definition for SCM BPO given in the research report states that it includes planning and managing all activities in the entire product life-cycle such as source and procurement, manufacture, delivery, returns as well as a host of support activities like MDM (Master Data Management) and RAC (Reporting, Analytics and Compliance) support.
Potential of SCM market
The supply chain management BPO market has still a lot more potential to evolve. According to Saurabh Gupta, the market has a huge value proposition which has been untapped but having early market adoption. However, unlike certain other segments, providers who have expertise and experience in all segments of SCM are limited. This is not the case with HRO (human resources outsourcing), F&A outsourcing efforts, Procurement Outsourcing (PO) etc.
The research report from Everest Group has been well formulated as it has sized up the market, explored the capabilities needed for each area, provides insights into growth drives as well as analyses the leading players in the market.