Course #: CM379 Title: Co-Sourcing: An Alternative to Outsourcing Scheduled For: Wednesday, Round 7, 8:15 -> 9:15 am Presented By: William L. Ware, CMDSM James P. Mullan, CMDSM Marlene O’Hare, CMDSM Nick Staffieri
The market has changed. With reduced staff and a smaller budget, businesses need to accomplish more with less resources. Alternative sourcing provides the answer.
What are your sourcing alternatives?
You retain complete control.
Beneficial if you have steady, year-round volumes.
Hard to adapt if there are peaks and valleys concerning your mail volume.
You select the best people for your operation.
More difficult to remove/replace staffing.
Can be an expensive solution because you pay for salaries/benefits.
Preferred if your organization’s primary business is in the mail or closely related industry.
Preferred if there are no qualified out-source providers in your area.
If done right, you can realize immediate savings and cost benefits.
Allows you to focus on your core business and lets experts run your mail operations.
Allows you to bring in subject matter experts (SME).
You are not responsible for staying current with state of the art equipment.
Depending upon your contract, can help you share liability issues.
Gives predictable and stable costs over the length of your contract.
Downside to Out-Sourcing
You greatly lose control of your mail operations.
You rely on them to provide the best people.
Can expose you to more risk.
Their quality standards may not meet your expectations.
An outside group is not necessarily familiar with your operation and business.
May be an extensive learning period to adapt to client expectations.
Longer term commitment, usually three years or more.
defined as service performed by both internal staff and external resources.
a business practice where service is performed by staff from inside an organization and also by an external service provider.
a partnership where all parties are responsible for the success of the project.
Is a combination of both in-house and out-sourced resources.
Allows you to mix and match resources.
The client has more flexibility.
You only retain the best resources to meet your needs.
Can be a bridge from out-sourcing to in-house.
Can be a bridge from in-house to full out-sourcing.
Get to see every day how a potential out-sourced staff performs.
A co-source solution is less threatening to in-house staff.
Is the best solution for cyclical or variable needs.
Organizations that have peaks and valleys in their volumes should consider co-sourcing.
Reduced financial burden
Gain thought leadership
Concentrate limited internal resources
Manage a variable cost structure
Full-time on-site support
Part-time on-site support
Wanted from a Provider
A shared vision
Implementing a Sourcing Arrangement
Plan and assess – take stock of your current situation, develop your vision for the arrangement, identify potential providers.
Select the provider – check potential providers’ experience with like-sized companies in your industry, look for the ability to provide specialized skills and a global reach.
Implement – the provider should establish a time line and project plan, spell out its role in the enterprise, and its relationships with other functions.
Monitor and report – periodic ongoing communication is critical, regular contact between all parties, and synergies between the in-house team and the service provider.
Scope of consulting resources
Forging a Partnership
Realize operational and financial efficiencies related to staffing costs and technology acquisition.
Eliminate or reduce staff time spent on transactional activities.
Become more efficient and effective in the delivery of services to your organization.
Shift resources to other higher value or strategic areas.
Implement global program consistency, governance, and reporting.
Mitigate the need to hire staff needed only during peak periods or for special projects.
Access management expertise.
A Worthy Partner
Financial stability – if the company is public, review their past financial statements and filings. If private, evaluate the strength of ownership, including any parent company relationships, request references and look at the company’s history of growth.
Staff experience and expertise – this is critical if you want a truly consultative partnership. Are they thought leaders? Brainstorm with others about what you need in an outsourcing partner, and don’t be afraid to use a consultant to help with the process.
Best-of-breed operational and technology systems – your provider should have top-tier technology. They should also work with their own strategic or outsource partners.
An Alternative Sourcing Plan
Having an alternative sourcing plan is an opportunity that no organization, regardless of size, should dismiss without careful investigation.
Organizations must change to survive and innovate to thrive.
With an efficient and focused alternative sourcing partner ready and able to respond to your needs, organizations will be best-positioned to navigate the turbulent waters of both today and tomorrow.
Why Employ Alternative Sourcing Strategies?
To put the right tools in place – at the appropriate cost.
To gain or leverage expertise.
To avoid unnecessary capital investment or infrastructure.
To free up resources.
Results from Alternative Sourcing
Significant cost improvements
Gained business expertise and knowledge
New way of thinking
Executive/management time freed up
Flexibility and scalability
Opportunities for Alternative Sourcing
Customer Service Support
Order Management and Fulfillment Systems
Enterprise Data Management
Remittance and Lockbox Processing
Warehouse & Distribution
Strategic Business Planning -
Execution and Evaluation
The million dollar question:
“ What are we trying to accomplish?”
Request For Information (RFI)
2. Resource Identification
Due Diligence Team
3. Criteria Establishment
4. Due Diligence
Establish a plan
Go in with an open mind
Do not rush the process
Request For Proposal (RFP)
5. Decision Making
Measure and evaluate pros and cons
Conduct full cost analysis
Executive presentation / recommendation
Community and media
7. Execution and Evaluatio n
Execution and conversion
Clarity is the key
2 companies = 2 languages
Best Practices in Alternative Sourcing
Identify benefits and risks of alternative sourcing to your organization.
Determine methods of alternative sourcing that are best for your organization.
Select the most appropriate business functions to out-source and/or co-source.
Choose partners that are ideally suited to collaborating with you on these business functions.
Consider the Following:
The goal is always Customer Satisfaction. Never lose sight of what drives your decision.
The rewards must always out weigh the risks. Do not make a decision without weighing all the options. Do not make a decision to change your sourcing unless it fits your organization and corporate culture.
Pricing is important, but not the most important variable. What good is getting the lowest price if the sourcing solution does not fit your needs?
Timing is crucial, but not always a deal maker or breaker. Is it the ‘right time’ to make the deal?
Knowing what to buy. What is the real ‘value-added’ that the sourcing provider will bring to your organization? Can you do it better and with less costs in-house?