Our Client, Company E were continually suffering from internal failures from two major functions within their operational headquarters.  These functions were pivotal to the overall effectiveness of our client's ability to provide service excellence to their internal and external customer base.....

Working on the direction of the Executive Committee, two independent appraisals were carried out on the functions in question. These included (but were not limited to) full process and value stream mapping workshops, financial appraisals, operational effectiveness and levels of expertise and innovation within the team(s).

Following the appraisals, simple re-sourcing activities were evaluated with a view to potentially outsourcing both functions - to either a single or multiple 3rd Party provider.

"Outsourcing of internal functions can be fraught with emotion. The uncomfortable nature of outsourcing and it's potential effect on staff sometimes clouds the real issues surrounding the functions in question.  However, a good outsourcing strategy can bring great results, both financially and operationally.  It shouldn't just be considered a last resort.  If a 3rd Party can provide an 'expert' service for reduced costs and greater benefits, why shouldn't it be a viable option?"

Following the intial appraisals, separate 3rd Party providers were approached for each  function.  A proposal to fully explore the outsourcing options was put forward to our Client.  The review  involved:

Implementing two independent project definitions and timing plans

Preparing full process and procedural reviews for each function

Preparing full functional and capability studies with the 3rd Party providers

Developing revised process maps with the 3rd Party providers to ensure all activites were covered from cradle to grave

Carrying out a full appraisal of IT systems to ensure all ERP and supporting systems were compatible for data interchange

Preparing costing models from each provider for comparison with the current state

Negotiating immediate cost reductions and future cost-down initiatives with the potential providers

Outlining, appraising, and comparing future development opportunities for the internal and outsourcing options

Preparing and presenting the final costed proposal to the Executive Committee

Prior to the final findings being presented, a decision was made not to proceed with the outsourcing option proposed for one of the functions. It was felt that with training and development the existing function could perform as well as - if not better - than the 3rd Party source.  Outsourcing was simply not viable for this function.

"It must be noted that once an ousourcing option has been tabled, as with any project, the investigative activities give the ability to make an informed decision.  No project is worth moving forward with if it is not going to achieve the desired results - and especially not to save face!  Time and effort are key in the initial stages of a project to prove it's viability.  This time and effort is never wasted even if the project doesn't materialize - it simply proves that the right decision can been made using factual data."

Following presentation to the Executive Committee, a further project plan was created for the implementation of the outsourcing provider.  Key tasks included:

• Full costing, by commodity and individual part completed and agreed
• Cost-down intiatives to be completed and agreed
• Defined contracts and service level agreements to be signed
• IT systems integration
• Staff re-deployment, TUPEE, or redundancy
• Staff integration into 3rd Party, Employment T's & C's, training and development
• Stock and Work In Progress (WIP) to be checked and transferred or sold
• Current suppliers to be informed of outsourcing decision
• Key internal / external Customers to be informed of outsourcing decision
• Go-live date to be confirmed with initial review meetings scheduled

And also not forgetting,

• Training and development plans for function not to be outsourced

The outsourcing strategy, chosen option and project implementation was successful.

Benefits

Considerable reduction in operating costs

Considerable parts' spend reduction

Vastly improved customer service

Vastly improved utilization of staff