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Smartsourcing   Adding  Innovation to the  “Cost Cutting”  Outsourcing Dr. Nicolae Varachiu Acquis Technical Officer, ARIE...
If he's so smart,  how come he's dead? - Homer Simpson
The most profound impact of… <ul><li>… the  20 th -century enterprise was the way we moved  workers  to where the  work  w...
Sourcing <ul><li>= a number of procurement practices, aimed at:  </li></ul><ul><li>finding,  </li></ul><ul><li>evaluating ...
Outsourcing <ul><li>= subcontracting a process, such as product design or manufacturing, to a third-party company   </li><...
Business segments typically outsourced : <ul><li>information technology  </li></ul><ul><li>human resources  </li></ul><ul>...
Multisourcing <ul><li>= large (predominantly IT) outsourcing agreements. </li></ul><ul><li>Multisourcing  is a framework t...
Offshore <ul><li>Offshoring  describes the relocation of business processes from one country to another.  </li></ul><ul><l...
Nearshoring <ul><li>= means  sourcing  service activities to a foreign, lower-wage country that is relatively close in dis...
Offshore & Outsourcing <ul><li>Outsourcing  involves contracting with a supplier, which  may   or   may not  involve some ...
Reasons for outsourcing:   <ul><li>C ost savings </li></ul><ul><li>C ost restructuring </li></ul><ul><li>I mprove quality ...
Reasons for outsourcing:   <ul><li>Cost savings </li></ul><ul><li>Cost restructuring </li></ul><ul><li>I mprove quality  K...
First reasons for outsourcing:   <ul><li>Cost savings   </li></ul><ul><li>The lowering of the overall cost of the service ...
Smartsourcing . . .   <ul><li>… is not about   …is about   </li></ul>economy of scale economy of scope just technology com...
C ENTER FOR  G LOBAL  O UTSOURCING   <ul><li>http://www.outsourceglobal.org/ </li></ul><ul><li>6 th Annual Int'l  Smart-So...
Pareto Principle  or the  80-20 rule  applied to organizations:   non -core functions/ competency core  functions/ compete...
Take advantage from diversity! !  ! <ul><li>All policemen are British </li></ul><ul><li>All cooks are French </li></ul><ul...
Take advantage from diversity? ?  ? <ul><li>All policemen are German </li></ul><ul><li>All cooks are British </li></ul><ul...
Take advantage from diversity? ?  ? <ul><li>All policemen are German </li></ul><ul><li>All cooks are British </li></ul><ul...
Smartsourcing   <ul><li>Increases innovation in processes, from core to non-core and let the organization to: </li></ul><u...
Outsourcing   Smartsourcing ? <ul><li>Focusing more on costs  &  replicating the status quo </li></ul><ul><li>No interest ...
Outsourcing   Smartsourcing ? <ul><li>“ The key in the case of  Smartsourcing  is that you need to be as diligent and crit...
 
Low Low Low High Competency Differentiation Customer value
Outsourcing   Low Low Low High Competency Differentiation Customer value
Smartsourcing   Low Low Low High Competency Differentiation Customer value
Smartsourcing   Low Low Low High Competency Differentiation Customer value Push Towards Higher Value, Differentiation, and...
Smartsourcing   Low Low Low High Competency Differentiation Customer value Push Towards Higher Value, Differentiation, and...
Smartsourcing simple questions <ul><li>Do you know what your  core competencies  are so that you can focus and prioritize ...
Smartsourcing Dashboard Excellen t Poor How important is the process to your competitive position? Non-Core Core Segment 3...
Segment 1: Process  Optimization <ul><li>Core  processes you  execute well  are sources of long-term competitive advantage...
Segment 2: Process  Re-engineering <ul><li>Processes you consider the  core   of your business but which  perform poorly  ...
Segment 3: Process  Outsourcing <ul><li>Processes that  do not differentiate you  in the market and  are not executed well...
Segment 4: Process  Offshoring <ul><li>Processes that offer  not competitive advantage  but  are operating above industry ...
Thank you for your attention! Va multumesc pentru atentie!
Team working
 
 
 
 
 
 
 
Hammer principle
Smartsourcing
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Transcript of "N.Varachiu_ARIES_Honeywell"

  1. 1. Smartsourcing Adding Innovation to the “Cost Cutting” Outsourcing Dr. Nicolae Varachiu Acquis Technical Officer, ARIES Business Development Coordinator, Honeywell
  2. 2. If he's so smart, how come he's dead? - Homer Simpson
  3. 3. The most profound impact of… <ul><li>… the 20 th -century enterprise was the way we moved workers to where the work was. </li></ul>Thomas M. Koulopoulos, Tom Roloff, Smartsourcing – Driving Innovation and Growth Through Outsourcing , Platinum Press, 2006 … the 21 st -century enterprise will be the way we move work to where the workers are.
  4. 4. Sourcing <ul><li>= a number of procurement practices, aimed at: </li></ul><ul><li>finding, </li></ul><ul><li>evaluating and </li></ul><ul><li>engaging </li></ul><ul><li>suppliers of goods and services </li></ul>http://en.wikipedia.org/wiki/
  5. 5. Outsourcing <ul><li>= subcontracting a process, such as product design or manufacturing, to a third-party company </li></ul>http://en.wikipedia.org/wiki = a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. http://financial-dictionary.thefreedictionary.com/
  6. 6. Business segments typically outsourced : <ul><li>information technology </li></ul><ul><li>human resources </li></ul><ul><li>facilities and real estate management </li></ul><ul><li>accounting </li></ul><ul><li>customer support and call center </li></ul><ul><li>telemarketing / market research, </li></ul><ul><li>manufacturing </li></ul><ul><li>engineering </li></ul>http://en.wikipedia.org/wiki
  7. 7. Multisourcing <ul><li>= large (predominantly IT) outsourcing agreements. </li></ul><ul><li>Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. </li></ul>http://en.wikipedia.org/wiki
  8. 8. Offshore <ul><li>Offshoring describes the relocation of business processes from one country to another. </li></ul><ul><li>This includes any business process such as production, manufacturing, or services. </li></ul>http://en.wikipedia.org/wiki/Offshoring
  9. 9. Nearshoring <ul><li>= means sourcing service activities to a foreign, lower-wage country that is relatively close in distance or time zone (or both). </li></ul><ul><li>Examples of nearshoring: </li></ul><ul><ul><ul><li>American clients nearshoring to Mexico, </li></ul></ul></ul><ul><ul><ul><li>Austrian clients nearshoring to Slovakia, </li></ul></ul></ul><ul><ul><ul><li>Japanese clients nearshoring to China. </li></ul></ul></ul>http://en.wikipedia.org/wiki
  10. 10. Offshore & Outsourcing <ul><li>Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring . </li></ul><ul><li>Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation </li></ul>http://en.wikipedia.org/wiki
  11. 11. Reasons for outsourcing: <ul><li>C ost savings </li></ul><ul><li>C ost restructuring </li></ul><ul><li>I mprove quality K nowledge </li></ul><ul><li>C ontract O perational expertise </li></ul><ul><li>S taffing issues C apacity management </li></ul><ul><li>C atalyst for change </li></ul><ul><li>R educe time to market </li></ul><ul><li>R isk management T ime zone </li></ul><ul><li>C ustomer pressure. </li></ul>http://en.wikipedia.org/wiki
  12. 12. Reasons for outsourcing: <ul><li>Cost savings </li></ul><ul><li>Cost restructuring </li></ul><ul><li>I mprove quality K nowledge </li></ul><ul><li>C ontract O perational expertise </li></ul><ul><li>S taffing issues C apacity management </li></ul><ul><li>C atalyst for change </li></ul><ul><li>R educe time to market </li></ul><ul><li>R isk management T ime zone </li></ul><ul><li>C ustomer pressure. </li></ul>http://en.wikipedia.org/wiki
  13. 13. First reasons for outsourcing: <ul><li>Cost savings </li></ul><ul><li>The lowering of the overall cost of the service to the business. This will involve reducing the scope , defining quality levels. Access to lower cost economies through offshoring . </li></ul><ul><li>Cost restructuring </li></ul><ul><li>Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable. </li></ul>http://en.wikipedia.org/wiki
  14. 14. Smartsourcing . . . <ul><li>… is not about …is about </li></ul>economy of scale economy of scope just technology competency ownership partnership cost cutting innovation cheap labor smart, educated workers episodic here to stay just outsourcing outsourcing is only one facet T. Koulopoulos, T. Roloff, Smartsourcing . . ..
  15. 15. C ENTER FOR G LOBAL O UTSOURCING <ul><li>http://www.outsourceglobal.org/ </li></ul><ul><li>6 th Annual Int'l Smart-Sourcing Conference , Atlantic City, NJ,USA on Sept. 6-7, 2007 </li></ul><ul><li>7 th Annual Int’l Smart-Sourcing Conference , to be held in Hyderabad City, India from August 8-9, 2008 </li></ul>
  16. 16. Pareto Principle or the 80-20 rule applied to organizations: non -core functions/ competency core functions/ competency areas that define the organization’s mission
  17. 17. Take advantage from diversity! ! ! <ul><li>All policemen are British </li></ul><ul><li>All cooks are French </li></ul><ul><li>All mechanics are German </li></ul><ul><li>All lovers are Italians </li></ul><ul><li>And everything is organized by Swiss </li></ul>
  18. 18. Take advantage from diversity? ? ? <ul><li>All policemen are German </li></ul><ul><li>All cooks are British </li></ul><ul><li>All mechanics are French </li></ul><ul><li>All lovers are Swiss </li></ul><ul><li>And everything is organized by Italians </li></ul>
  19. 19. Take advantage from diversity? ? ? <ul><li>All policemen are German </li></ul><ul><li>All cooks are British </li></ul><ul><li>All mechanics are French </li></ul><ul><li>All lovers are Swiss </li></ul><ul><li>And everything is organized by Romanians </li></ul>
  20. 20. Smartsourcing <ul><li>Increases innovation in processes, from core to non-core and let the organization to: </li></ul><ul><ul><li>Focus on their most critical areas of differentiation , customer value and competency </li></ul></ul><ul><ul><li>Achieve high level of innovation in non-core operations </li></ul></ul>
  21. 21. Outsourcing Smartsourcing ? <ul><li>Focusing more on costs & replicating the status quo </li></ul><ul><li>No interest on concurrent innovation initiative </li></ul>T. Koulopoulos, T. Roloff, Smartsourcing . . .. <ul><li>Improving process excellence & </li></ul><ul><li>promoting innovation … </li></ul><ul><li>… among organization’s core process initiatives </li></ul><ul><li>Strong relationship between organization and its service partner </li></ul>
  22. 22. Outsourcing Smartsourcing ? <ul><li>“ The key in the case of Smartsourcing is that you need to be as diligent and critical of defining and understanding the value of your core competencies as you are in defining and understanding the value of the processes you outsource and then creating innovation across the spectrum.” </li></ul>T. Koulopoulos, http://www.itbusinessedge.com/item/?ci=14270
  23. 24. Low Low Low High Competency Differentiation Customer value
  24. 25. Outsourcing Low Low Low High Competency Differentiation Customer value
  25. 26. Smartsourcing Low Low Low High Competency Differentiation Customer value
  26. 27. Smartsourcing Low Low Low High Competency Differentiation Customer value Push Towards Higher Value, Differentiation, and Innovations
  27. 28. Smartsourcing Low Low Low High Competency Differentiation Customer value Push Towards Higher Value, Differentiation, and Innovations
  28. 29. Smartsourcing simple questions <ul><li>Do you know what your core competencies are so that you can focus and prioritize your energies on them? </li></ul><ul><li>Can you define your processes and your work so that you can transport them easily to partners? </li></ul><ul><li>Are you able to measure innovation and its impact in all aspects of your business? </li></ul>T. Koulopoulos, T. Roloff, Smartsourcing . . ..
  29. 30. Smartsourcing Dashboard Excellen t Poor How important is the process to your competitive position? Non-Core Core Segment 3: Process Outsourcing Segment 4: Process Offshoring Segment 1: Process Optimization Segment 2: Process Re-engineering How good is your performance? T. Koulopoulos, T. Roloff, Smartsourcing . . ..
  30. 31. Segment 1: Process Optimization <ul><li>Core processes you execute well are sources of long-term competitive advantage and differentiation </li></ul><ul><li>Continually optimize these processes to maintain competitive advantages </li></ul>
  31. 32. Segment 2: Process Re-engineering <ul><li>Processes you consider the core of your business but which perform poorly leave you vulnerable to competitive disadvantage </li></ul><ul><li>Define a plan to fix these processes but keep them in-house and migrate them to Segment 1 as soon as possible </li></ul>
  32. 33. Segment 3: Process Outsourcing <ul><li>Processes that do not differentiate you in the market and are not executed well could leverage best in-class operation from a third party </li></ul><ul><li>Keeping these processes in-house may be unnecessarily expensive but they are not likely mature enough to offshore </li></ul>
  33. 34. Segment 4: Process Offshoring <ul><li>Processes that offer not competitive advantage but are operating above industry average performance levels can be moved offshore </li></ul><ul><li>Offshore providers will replicate existing process performance at a much lower cost </li></ul>
  34. 35. Thank you for your attention! Va multumesc pentru atentie!
  35. 36. Team working
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  43. 51. Hammer principle
  44. 52. Smartsourcing
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