The outsourcing of supply functions has typically been considered in terms of shedding non-core functions or functions which have been difficult to control from an industrial point of view. However, in today’s environment, the outsourcing decision is more complex. Many firms recognise the inherent value in their own IT and intellectual property. The Australian market in outsourcing has also changed in its complexity. Whilst many providers have come from a traditional transport base, there are many providers of value added services that can be applied to supply chain functions, specifically in the area of distribution.
The process of outsourcing must be rigorous. Dawson Consulting has adopted such rigour through a number of methodologies described below:
Assessment of Outsourcing viability.
The outsourcing decision is not a simple one. Many firms do not recognise the value of their own people and their own assets, particularly systems assets. They are also too quick to acknowledge the perceived capabilities of suppliers. The Dawson Consulting approach matches a firms current capabilities and assesses these against benchmark operations. These operations are then matched to the market to establish if and why outsourcing will work and which service providers are best able to undertake the task at the right price. These recommendations are then presented as a value proposition to the client for decision and implementation.
Specification of Requirements and evaluation of alternatives.
The ability to correctly specify the required outsourced operation is difficult. Starting with customer service standards, Dawson Consulting establishes the operational profile, demand characteristics and the systems requirements of each firm. Then, together with the client, processes associated with the outsourced function are documented and placed in the specification. This then forms the basis of the request for quote or the request for tender. Dawson Consulting then uses a well developed assessment criteria to rigorously assess the alternative scenarios presented for comparison. Where possible, we try to specify and evaluate similar operations but also leave scope for the potential providers to present different alternatives to the ones envisaged.
Negotiation of a contract regularly starts during the tender process. The type of contract envisaged is described and the key characteristics placed in the tender document itself. This way, there can be no escape from the provider on a clause that has been included. Dawson Consulting has undertaken a significant number of contractual negotiations for some of the largest outsourcing contracts ever let including CSR Timber, NIKE, Telstra, WESFI and many others. These negotiations have resulted in the development of a benchmark logistics agreement and the methodology to support negotiations.