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Outsourcing – Myths vs. Realities

Posted by Mark Fallon on Dec 18, 2013 8:00:40 AM

Outsourcing is neither the magic bullet depicted by some vendors and consultants, nor the evil villain feared by many operation managers. It’s a strategic tool for enhancing performance that should be considered by all companies. As with any strategy, it should be reviewed on a regular basis for consistency with the organization’s mission, shifts in technology and vendor performance.

Let's dispel certain myths about outsourcing:

Myth – Outsourcing is easy.
Reality – Outsourcing requires significant planning and resources to be effective. This is especially true when transitioning from an internal operation to an outsourcing vendor.

Myth – Outsourcing shows a failure in management.
Reality – Outsourcing is an effective tool used everyday by competent managers. Most shops outsource some functions, like couriers, presort or offset printing.

Myth – Outsourcing can't be done in a union shop.
Reality – Outsourcing exists in all environments. I visited a shop that was half-union, half-vendor. And it worked.

Myth – Outsourcing will solve all my management problems.
Reality – Outsourcing relationships need to be managed to be successful. The function may have been outsourced, but the responsibility for success remains internal.

Myth – Outsourcing will solve all my human resources problems.
Reality – Outsourcing staff are people too. The vendor may have responsibility for the actual hiring and firing, but the customer will have to work with the employees.

Myth – Outsourcing is guaranteed to save me money.
Reality – Outsourcing may cost you more if not used properly. The manager must keep accurate records of service levels, volumes and charges to ensure the vendor is in compliance with the contract.

Myth – Outsourcing is inevitable.
Reality – Outsourcing is only one choice among many. Vendors will often cite statistics that show how quickly outsourcing is growing. However, there are also companies that insource after failed outsourcing attempts, and many companies that decide to keep their internal operations.

Myth – Outsourcing is a topic I should never bring up with management.
Reality – Outsourcing options should be reviewed on a regular basis. Putting your head in the sand will only guarantee that you won't see what hits you. Face the outsourcing challenge, and make the appropriate business decision for your company.

 

Operations Management

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