Executive Briefings

How Companies Are Making Smarter Decisions About Supply-Chain Outsourcing

What are the latest trends in supply-chain outsourcing? We get a perspective from Michael Dominy, research director with Gartner.

Big changes are afoot in the world of outsourcing. Both traditional contract manufacturers and third-party logistics providers are expanding their scope of services, says Dominy. CMs are offering transportation and logistics support for the items they make, while 3PLs are venturing into light assembly, manufacturing and after-sales service. It's inevitable that the two types of entities will start to overlap in the services they provide.

Many companies are only too happy to turn over management of their supply chains to skilled outsiders. Dominy says supply-chain executives and their staffs "are under tremendous pressure to improve performance, yet they're not able to buy as much software or hire as many people as they want." In turning to outsourced providers, companies can convert fixed cost into variable cost, while taking advantage of a range of new services that are available in the marketplace today.

A similar evolution is under way on the information-technology side. Dominy sees an increase in partnerships between software vendors and business process outsourcing (BPO) providers, based on the variable-cost model. Just a few years ago, he says, most companies had no choice but to buy software and run it internally. With the growth of outsourced providers and the maturation of cloud technology, "we're now seeing various options coming into the market."

In fact, the arrival of the cloud has done much to foster outsourcing. It acts as a "key enabler for delivering [systems] to multiple clients in a scalable way," says Dominy. The cloud model is a better reflection of the how modern-day supply chains operate - as networks that aren't limited to any one company. "The best way to coordinate activities is to be able to share information in a common area."

New studies of trends in outsourcing confirm an increase in the practice, even in "certain areas you wouldn't normally anticipate," says Dominy. They include demand planning and sales and operations planning, both functions that have long been thought to be the sole responsibility of individuals within the organization.

To view video in its entirety, click here


Keywords: supply chain, supply chain management, supply chain outsourcing, global logistics, 3PL, third party logistics, BPO, business process outsourcing, logistics services, supply chain planning, sourcing solutions, supply chain systems

Big changes are afoot in the world of outsourcing. Both traditional contract manufacturers and third-party logistics providers are expanding their scope of services, says Dominy. CMs are offering transportation and logistics support for the items they make, while 3PLs are venturing into light assembly, manufacturing and after-sales service. It's inevitable that the two types of entities will start to overlap in the services they provide.

Many companies are only too happy to turn over management of their supply chains to skilled outsiders. Dominy says supply-chain executives and their staffs "are under tremendous pressure to improve performance, yet they're not able to buy as much software or hire as many people as they want." In turning to outsourced providers, companies can convert fixed cost into variable cost, while taking advantage of a range of new services that are available in the marketplace today.

A similar evolution is under way on the information-technology side. Dominy sees an increase in partnerships between software vendors and business process outsourcing (BPO) providers, based on the variable-cost model. Just a few years ago, he says, most companies had no choice but to buy software and run it internally. With the growth of outsourced providers and the maturation of cloud technology, "we're now seeing various options coming into the market."

In fact, the arrival of the cloud has done much to foster outsourcing. It acts as a "key enabler for delivering [systems] to multiple clients in a scalable way," says Dominy. The cloud model is a better reflection of the how modern-day supply chains operate - as networks that aren't limited to any one company. "The best way to coordinate activities is to be able to share information in a common area."

New studies of trends in outsourcing confirm an increase in the practice, even in "certain areas you wouldn't normally anticipate," says Dominy. They include demand planning and sales and operations planning, both functions that have long been thought to be the sole responsibility of individuals within the organization.

To view video in its entirety, click here


Keywords: supply chain, supply chain management, supply chain outsourcing, global logistics, 3PL, third party logistics, BPO, business process outsourcing, logistics services, supply chain planning, sourcing solutions, supply chain systems