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Dell Embraces Vested Outsourcing

Dell Inc. looks to the emerging concept of vested outsourcing, in a partnership with Genco, to improve the high-tech giant's global supply chain and level of customer service. Dell executive director Robert McIntosh shares the details.

McIntosh oversees Dell's global reverse manufacturing for the Americas. He is also responsible for logistics and fulfillment in the region. Dell's need, he says, was to revisit its partnership with Genco, which handles the company's reverse manufacturing.

The companies moved to embrace the concept of vested outsourcing, which brings buyers and suppliers much closer together. The decision arose from Dell's work with the University of Tennessee at Knoxville, and supply-chain consultant Kate Vitasek. "She brought us a pretty far-reaching concept," McIntosh says.

Vested outsourcing allowed Dell and Genco to think about the real outcome of their relationship. They embarked on an 18-month journey to explore the concept of vested outsourcing.

McIntosh defines the term as "a relationship where you're both very committed to making it work." It also prompted Dell to dig more deeply into the needs of its customer base.

Dell was looking for significant improvements in improvements in quality, customer experience and cost. The work involved discarding between 20 and 30 service-level agreements, in favor of "five or six things that we really wanted as desired outcomes.

"It's a big shift," he says, "because you can't necessarily measure everything that's going on within the process."

By simplifying its objectives, Dell was able to explore new ways of doing business "without the handcuffs on," McIntosh says. No longer was it focusing on aspects of the contract that didn't add value from the customer's perspective.

Initially, he had some trepidation about the new relationship. As he learned more, however, "I knew who we were dealing with on the other side of the table". We had a pretty strong foundation of trust that made the commercial transaction go a lot easier."

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