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Outsourcing: A Strategic Framework

  • ID: 42759
  • Report
  • January 1997
  • 75 pages
  • American Productivity & Quality Center, APQC
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Competition requires that today’s organizations reduce costs and improve quality to gain a competitive advantage. Increasing demand for low costs and high-quality service levels has forced companies to rethink the way they conduct business. This has prompted management to undertake corporatewide initiatives to radically restructure and improve the business posture of organizations. Outsourcing is often the by-product of these efforts as companies strive to more intelligently deploy their limited resources and significantly improve operations to function more effectively in a highly competitive, consumer-oriented marketplace. This study was undertaken in late 1996/early 1997 to identify and examine innovations, best practices, and key trends in the area of outsourcing. This study did not narrowly focus on the outsourcing process for any specific function; instead, it broadly focused on successful decision-making, management, and measurement processes applicable to all functions. The goal was for the information uncovered to enable participants to direct their own outsourcing processes more effectively and to identify performance gaps, as well as to help them gain a better understanding of the issues and challenges involved in improving and re-engineering the outsourcing process.

Nine companies participated in the study by attending a series of planning sessions, completing data-gathering surveys, and attending or hosting on-site interviews. Of those nine companies, five sponsored the study (“sponsor” companies), and four were identified as having a strong or innovative outsourcing program in place. These four were invited to participate in the study as benchmarking partners (“partner” companies). One of the five companies that sponsored this study submitted data collection tool responses
from three different divisions.

METHODOLOGY

The consortium benchmarking methodology was developed in 1993 and serves as one of the premier methods for successful benchmarking in the world. It is an extremely powerful tool for identifying best and innovative practices and for facilitating the actual transfer of these practices. The data collection tools used to gather information include questionnaires and site visits. Two questionnaires were used:
- Data Collection Tool: quantitative questions, designed to collect objective and quantitative data
- Site Visit Discussion Guide: designed to collect qualitative information about targeted aspects of the outsourcing decision-making, management, and
measurement processes

The four partners hosted half-day site visits, allowing sponsors to meet with key personnel and sharing their outsourcing strategies and practices. A group of consortium members attended each site visit in order to participate in the discussion and to experience different programs firsthand. Both partner companies and sponsors responded to the Data Collection Tool. Only partner companies were asked to respond to the Site Visit Discussion Guide. Secondary research conducted was used to help select innovative companies. In addition to this research, consortium members, APQC staff, and the subject matter expert identified potential participants based on their firsthand experiences
and research.
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- Sponsor and Partner Companies

A complete listing of the sponsor companies in this study, as well as the best-practice (“partner”) companies that were benchmarked for their innovation and
advancement in outsourcing.

- Executive Summary

A bird’s-eye view of the study, presenting the key findings discovered and the methodology used throughout the course of the study. The findings are explored in detail in following sections.

- Key Findings

An in-depth look at the nine key findings of this study in three topic areas: decision model, managing the process, and measures of success. The findings are supported by graphs and tables of quantitative data and qualitative
examples of practices employed by the partner companies.

- Partner Company Profiles

Background information on the partner companies, as well as their innovative outsourcing processes.
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