FINANCIAL SERVICES: Harness your supply base to power your business

Driving more value from the supply market is a board level agenda item for Financial Services organizations around the world.

Discover how to effectively manage your supply base to deliver value to your business - above just cutting costs.

Click here to access our new Financial Services resource portal

Subscribe to our monthly e-newsletter

Recommended Reading

Connect with us

Subscribe to our RSS Feed

Your email:

Most Popular Posts

Proxima Blog

Current Articles | RSS Feed RSS Feed

Global myths of procurement outsourcing - Myth 5: PO means off-shoring

Posted by John Mathew on Mon, Dec 10, 2012 @ 04:43 AM
  
  
  
  
  
John Mathew Client Services Director

This myth is partially true – and partially a myth.  The offerings of many outsourcers are about off-shoring jobs to a low cost country, e.g. India.  However, not all providers operate this way.

Those that do typically have a ‘multi-tower’ offering, whereby procurement sits within a wider Finance & Accounting deal, alongside HR and IT outsourcing.

But procurement outsourcing in these types of deals is not what we, Proxima, recognize as procurement outsourcing.

They are generally focusing on the transactional end of the process – not on sourcing.  In effect, most off-shoring models are about running the same service you were getting before, more cheaply.

To us at Proxima, successful procurement outsourcing hinges on our ability to influence the behavior of people in the organization – and that means having business partners on-site, face-to-face.

Success hinges on having deep expertise and market insight – that means being in the market, and that requires in-country presence.  And for many organizations, it hinges on investing to save – and that means creating jobs.

Proxima is proud to be an employer of people in the US and Europe – where our clients are based.  It’s what makes us different, and what ensures we are able to offer the best procurement experience an organization is likely to encounter.

The truth: procurement outsourcing with Proxima is an on-shore/ near-shore model.  We create on-shore jobs in both US and Europe

Click here to access the previous posts: Myth 1 - ROI comes from cost reductions, Myth 2: The ROI from procurement outsourcing is insufficient, Myth 3: PO damages stakeholder relationships and Myth 4: PO results in a loss of control and increased risk

Tags: ,

Comments

I believe their is a huge difference between outsourcing vs offshoring. I believe clients are more open to a shared services solution in the UK but they are reluctant to lose that high touch and visibility which a UK RPO can provide. Cost is one thing but that should not compromise the quality in such a competitive marketplace where brand awareness and the candidate experience will always be key.
Posted @ Friday, December 21, 2012 5:34 AM by David Rogers - Omni RMS - Vendor Neutral - RPO
Traditional out-sourcing being outdated (whether it's long-term off-shoring &/or full spot out-sourcing) won't phase out but EVOLVE, as being the correct term. The modus operandi (product & competitive strategies) of each company defines what a company's needs are, in terms of facilitating the value chains, within the supply chain itself. If a proportion of the link would see value-add by out-sourcing (or off-shoring, in any case), then it may be the right conduit to fulfill the gap in garnering the best possible talents & costs mix. Out-sourcing is out-sourcing, period...whether it's talents / technology / Finance / FP&A / IT / BPO etc...off-shored, raw-mats & consumables (BoM ingredients), &/or the typical 3rd party ODMs / OEMs - out-sourcing (traditional, modified, or evolved, whatever we may term it as) will stay as part of the primary requirement to an effective supply chain. Unless, ops activities can be wholly fulfilled directly from in-country resources, there's no way cross-border trade will be left to stagnate with out-sourcing phased out. If that occurs, international trade, FTAs, G2G / B2B collaborations etc...will all phase out with it too.
Posted @ Friday, December 21, 2012 5:36 AM by Adrian Chen
I think more fiercer competition will change the outsouring style, some traditional outsourcing is buy & sell, but now the buyer need a complete solution for his supply chain, not only low cost, but also monitoring quality, suppliers & logistics management, even information service. The relation between the buyer and provider will be more closer, the buyer need more service and support from the provider, but focus on less providers.
Posted @ Friday, December 21, 2012 5:46 AM by Michael Ren
Additionally, every manufacturer must look at both the economic AND non-economic (intellectual property, security, quality, etc.) elements of this decision. Make vs. Buy includes some very delicate outsourcing validation questions to be asked. This is why a Certified Supplier Program is so critical to viewing the complete picture prior to making a decision. Ongoing, periodic review is equally essential. What was right 2 years ago may not be right today.
Posted @ Friday, December 21, 2012 5:47 AM by Daniel Feiman, MBA, CMC
With reference to offshoring, the work is done in different country mainly to leverage the cost advantages in terms of labour, energy, tax system and raw materials. Outsource on the other hand is contracting a third party to supply or render a service not considered to be a core competence of an organization or not cost effective to carry it in-house.
Posted @ Friday, December 21, 2012 5:48 AM by Sibaway Issah, MCIPS, CSCMP, MSc.
I don't know if this can be considered a myth, as to say one or the other is the optimal choice. To me it depends on what the company is offereing and which option best compements the offering.
Posted @ Friday, December 21, 2012 5:48 AM by Brandon Hood
With reference to offshoring, the work is done in a different country mainly to leverage the cost advantages in terms of labour, energy, tax and raw materials. Outsource on the other hand is contracting a third party to supply or render a service not considered to be core competence of an organization or not cost effective to carry it in-house.
Posted @ Wednesday, January 02, 2013 3:19 AM by Terry Yong
Hi Yong,  
In my experience, it is worth handling an activity in-house at break-even instead of outsourcing, provided the used resource will not negatively impact a core function of the organization. A start at break-even is an indication of more room for improvement over time with the acquired experience. I strongly disagree with reference to the vision of outsourcing to manipulating the service provider, because it is assumed the outsourced service is a core business of the provider, who renders the service to many customers thereby enjoying economies of scale. Thus due to specialization and experienced resource, the service provider could offer the same service at cost effective.
Posted @ Wednesday, January 02, 2013 3:21 AM by Sibaway Issah, MCIPS, CSCMP, MSc.
Post Comment
Name
 *
Email
 *
Website (optional)
Comment
 *

Allowed tags: <a> link, <b> bold, <i> italics