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SSP New Trends in Outsourcing  John Strange  Blackwell Publishing  New Trends in Outsourcing  Overview of Presentation  • ...
My experience……………..!  •     Blackwell Publishing (1993 - ): Academic, Scientific and        Medical Publishing         – ...
Outsourcing (cont’d)  •     Identify – what is really core business and, thus core competence.        Then focus internal ...
What are the critical success factors? (cont’d)  • Determine whether you wish to work directly offshore        or, via a v...
Blackwell Publishing case study (cont’d)  •     Got each vendor to complete         – Company profile         – Human reso...
Blackwell Publishing case study (cont’d)         –    Specified (internally) the workflow benefits (as well as the        ...
Blackwell Publishing case study (cont’d)  • English language (be careful)         –    UK v US…..!!              (Hindi, T...
Strategies for success?  •     But there are huge benefits         – Improved process         – Increased productivity    ...
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  1. 1. SSP New Trends in Outsourcing John Strange Blackwell Publishing New Trends in Outsourcing Overview of Presentation • Outsourcing – What does it mean? – Why is it important? – What is really core business and, thus core competence? • What are the trends? • What are the critical success factors?SSP: New Trends in Outsourcing John Strange 1st June 2005 2 New Trends in Outsourcing (cont’d) • Blackwell Publishing Case Study – Composition – Copy editing – Cost comparisons – Problems experienced • Strategies for success? • Future thoughts………?SSP: New Trends in Outsourcing John Strange 1st June 2005 3 1
  2. 2. My experience……………..! • Blackwell Publishing (1993 - ): Academic, Scientific and Medical Publishing – Responsible for global production strategy – Books & journals – Outsourced ‘composition’ and ‘manufacturing’ • Pearson Longman (1978 – 1992): Educational Publishing – Responsible for ‘Schools Division’ production strategy – Administration and systems for Group as a whole – Special focus on composition and pre-press – Books – Outsourced ‘composition’, ‘reproduction’ and ‘manufacturing’ • Prior to 1978 – 8 years in a small holiday guide publisher – 3 years in sales (printing company) – 3 years in works/factory management (printing company)SSP: New Trends in Outsourcing John Strange 1st June 2005 4 Blackwell Publishing • Revenues £200m • Academic, Scientific, Technical and Medical Books and Journals • Around 750 Journals (for nearly 600 Societies) per annum • 600+ New Books per annum • Over 900 employees • Offices in UK, US, Australia, Japan, China, Denmark, Germany • ‘Production’ in UK (Oxford and Edinburgh), US and AustraliaSSP: New Trends in Outsourcing John Strange 1st June 2005 5 Outsourcing • What does it mean? – The delegation of one or more business functions (or processes) to a third party, who in turn delivers services to agreed criteria • Some other associated terminology – Offshoring: the utilisation of a third party that is ‘offshore’ (i.e. not domestic), normally to a region where labour costs are lower • Why is it important? – As domestic costs rise (especially labour costs), one is forced to try and locate parts of the world, where you can buy services at a lower cost and, sometimes better quality with reduced lead times.SSP: New Trends in Outsourcing John Strange 1st June 2005 6 2
  3. 3. Outsourcing (cont’d) • Identify – what is really core business and, thus core competence. Then focus internal resources on this -which can then deliver: • Cost savings • Reduced lead times • Similar (or better quality) • Consistency • Scaleability • Areas that can be outsourced – Copy editing – Composition – Manufacturing – Customer services – Technology (support and development) – Some aspects of Finance (e.g. purchase ledger) – Rights and permissions – 24 x 7 help desksSSP: New Trends in Outsourcing John Strange 1st June 2005 7 Trends in Outsourcing? • Offshore outsourcing becoming very common (? the norm) – Europe far more experienced than US!!! – Concerns about loss of jobs domestically, but ……..? • Increasing breadth of outsourcing offerings – Vendors beginning to offer end -to -end solutionsSSP: New Trends in Outsourcing John Strange 1st June 2005 8 What are the critical success factors? • Be very clear about: What you want to outsource Why you want to outsource How you want to outsource • Define clearly the deliverables: – The processes and procedures – Acceptable lead times – What you will supply – The costs Service – Payment terms Level – Communications – Disaster recovery plans Agreement – Assessment procedures – ArbitrationSSP: New Trends in Outsourcing John Strange 1st June 2005 9 3
  4. 4. What are the critical success factors? (cont’d) • Determine whether you wish to work directly offshore or, via a vendors’ domestic office • Create an RFP (Request for Price) • Prepare cost comparisons (currency?) • Evaluate the short list of suppliers carefully – Visit them – Ask tough questions – What is their management team (and experience)? – What are their human resources policies? – Is there likely synergy between us?SSP: New Trends in Outsourcing John Strange 1st June 2005 10 What are the critical success factors? (cont’d) – Do they have the appropriate technology environment/expertise? – Take up references – Do they work for any of your competitors (if yes, who?) – What is their turnover/revenue? – ? The value of their largest account (not who but how much)? – Do they make a profit (and, will they from your work)?SSP: New Trends in Outsourcing John Strange 1st June 2005 11 Blackwell Publishing case study Strategy is to consolidate our supplier base on a global basis (currently produce journals in UK, Australia and US) - Improve buying power - Reduce support costs - Medium to large suppliers (provide a reasonable R & D) • Composition – Used China for Books (since ’80’s) – Used India for Journals (since ’94) – Start with competitor activity • Elsevier : very controlled workflows : primarily owned journals – Identified some potential suppliers in India – Initial meeting with them separately in UK – Then I visited them in India (look and listen carefully) – Prepared an RFP (based on UK journals)SSP: New Trends in Outsourcing John Strange 1st June 2005 12 4
  5. 5. Blackwell Publishing case study (cont’d) • Got each vendor to complete – Company profile – Human resources practices profile • Complete cost comparisons (in £) • Requested what discounts were available for increased volume (must apply to all pages) – Can have retrospective rebate scheme on value (£ or $) per annum • Carried out some trials (on previous papers) – Measured accuracy and feedback results • Further visits (from other colleagues in Production) to India • Encouraged the vendors to meet us in UK (increasing exposure)SSP: New Trends in Outsourcing John Strange 1st June 2005 13 Blackwell Publishing case study (cont’d) • Began with some ‘live’ work on a few journals (managing expectat ion levels carefully) • Look to work increasingly electronically (to minimise courier costs) and (in our case) direct (to maximise the financial benefits) • Prepared an SLA (Service Level Agreement) – Not so much a contract – more a ‘statement of intent’ • Careful not to rush to increase the volume too quickly • Also at this point, moved to China – Strategic (disaster recovery) – As it happened, I encouraged vendors in China I had worked with for many years on Books to expand into Journals • Then we extended to colleagues in US and Australia • Remember: you do not get anything for ‘free’ – Provided lots of training, support and feedback (360o) – Have annual Supplier Meetings (exchanging strategic directional plans for next 2-3 years)SSP: New Trends in Outsourcing John Strange 1st June 2005 14 Blackwell Publishing case study (cont’d) • Copy Editing – Quite ‘politically sensitive’ within BPL – Becoming increasingly a commodity – Important to meet your customers expectations (but not exceed them – if they won’t pay for it etc) – Define carefully what is meant by copy editing and, most important, what standards you require – Then identified which of our 5 Indian suppliers we would work with initially – Obtained costs – Carried out some trials; feedback; more trials etcSSP: New Trends in Outsourcing John Strange 1st June 2005 15 5
  6. 6. Blackwell Publishing case study (cont’d) – Specified (internally) the workflow benefits (as well as the savings) – Began with some UK titles in STM – Provided lost of training and support – Feedback critical – Now the default – Expanded into China – Suggested a methodology • (Indian manager: Philippines manager) – Improving all the time (especially the quality of English from graduates)SSP: New Trends in Outsourcing John Strange 1st June 2005 16 Blackwell Publishing case study (cont’d) • Cost comparisons US UK/ India China Europe Copy Editing 100 90 50 50 Composition 100 85 45 40SSP: New Trends in Outsourcing John Strange 1st June 2005 17 Blackwell Publishing case study (cont’d) • Problems experienced – Both India and China have a ‘service orientated’ culture • Good, but….. • Must emphasise ‘assume nothing’ (always ask if not absolutely certain) – Tendency to say ‘yes’ which might mean ‘no’ or probably ‘don’t know’! – Develop a rigid test plan and, stick to it (practically no exceptions) – Scaleability is a big strength, but….. (must plan in advance and, give sufficient notice) – They do experience large turnover of staff (often with little notice!)SSP: New Trends in Outsourcing John Strange 1st June 2005 18 6
  7. 7. Blackwell Publishing case study (cont’d) • English language (be careful) – UK v US…..!! (Hindi, Tamil, Mandarin…..!!) – Instructions (verbal or written) must be 150% clearSSP: New Trends in Outsourcing John Strange 1st June 2005 19 Strategies for success? • Manage the expectations carefully • Need support from senior management (CEO downwards) – Will not be a smooth ride (things will/do go wrong) – Not pain free • All about risk management to optimise benefits • Choose carefully what you decide to outsource – Don’t be too optimistic/aggressive – Identify some small/safe wins (then use these successes as ambassadors within your organisation for further expansion) • Manage change (of workflows, culture etc) very carefully • Measure performance: agreed KPI’s – If you can’t measure it, you can’t expect to improve itSSP: New Trends in Outsourcing John Strange 1st June 2005 20 Strategies for success? (cont’d) • Don’t allow yourself to be rushed (whatever the CEO says!) • Will need additional overhead costs (travel, training etc) – From the savings! • Visits – go and see for yourself – Once satisfied, share with colleagues • Ensure you have a clear idea of HR policies for all your vendors (pro-actively share with internal customers) • Document what you want (Service Level Criteria) • Ensure crystal clear instructions • Holy Grail – true electronic workflow (work aggressively towards this) – Don’t make FedEx, DHL etc even richer! • Share your strategies – Regular supplier meetings – You are all in this togetherSSP: New Trends in Outsourcing John Strange 1st June 2005 21 7
  8. 8. Strategies for success? • But there are huge benefits – Improved process – Increased productivity – Lower cost-of-sale – Reduced lead times (on average) – Improved service levels (which are sustained) – Excellent innovation – ScaleabilitySSP: New Trends in Outsourcing John Strange 1st June 2005 22 Future thoughts………? • Strategic priorities will change from a tactical outsourcing action plan to a central sourcing strategy (for all operations) • Outsource suppliers will offer more end-to -end solutions e.g. customer services through to on -line delivery • Early adopters of outsourcing will develop offshore operations to further drive down costs • Technology development and support will primarily be offshore • Publishers will be smaller, more highly focussed (retaining higher skilled, better paid employees) • Largest growth in outsourcing will be customer services, finance, HR, technology and more production managementSSP: New Trends in Outsourcing John Strange 1st June 2005 23 Conclusion……….!! Companies know that if they don’t outsource, somebody else will. If competitors act and you don’t respond, then you are putting your business at riskSSP: New Trends in Outsourcing John Strange 1st June 2005 24 8

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