Outsourcing Strategy – A Focus on Best Practices
There is no denying that outsourcing continues to proliferate rapidly throughout the Mail, Print, and Office Services industry. With this growth and outsourcing’s wide acceptance as a successful approach for managing non-core business support services, comes fallout from a proportionately increasing number of engagements that fail. Failed outsourcing engagements continue to increase in proportion to the industry’s growth.
What is the best way to overcome the challenges that come with outsourcing, as well as take advantage of the benefits and have a successful experience? One of the simplest ways to have the greatest success with outsourcing is to have a clear-cut understanding about the work you want to outsource and have realistic expectations about the outcome. Organizations seeking outsourcing must understand that their work begins long before signing a contract.
The following are 10 Best Practices that one can look to when investigating a new or reviewing an active outsourcing solution for on-site services. Take the following steps to establish goals and ensure means to success. They can be used as a guide to determine the best way to use outsourcing to your benefit and avoid the pitfalls that sometimes go along with an outsourcing strategy.
· Partnership - Outsourcing is a partnership that mandates continued management involvement from the buyer to ensure success. A complete hands-off approach can result in unwanted challenges and failures. As a partner in service, the buyer’s role entails managing contract compliance and services evolvement through: Service Level Agreements, reported metrics and Key Performance Indicators. Buyers should not, however, involve themselves in the management of their supplier’s business. You should hire a firm based upon their demonstrated expertise and excellent references. After that, let them do the work.
· Core Business - Is the provider’s core business services-centric or are there other drivers that may compromise services in the future? Core service providers bring significant value. Core services providers should be able to demonstrate a history of providing value and cost savings in a full spectrum of ancillary service rate plans and off-site support. Beware of services that are a vehicle for other sales opportunities or staffing firms without industry expertise, or relevant technology.
· Go Green - True providers have defined sustainability initiatives in Print & Mail services, for example: copier toner cartridges, smart print, mailing list hygiene, hybrid vehicles, and reduced carbon footprint.
· Staff Development - A true services provider is committed to the team that it places within an engagement. It will be able to demonstrate established employee welfare programs, prudent recruitment and screening programs, established training and employee development/advancement programs, and defined layers of additional corporate support for staff and management as well as the customer. Many outsourcing firms excel at “being there” for their customers, but unfortunately many are “not there” for their own management and staff.
· Technology - Technology is an integral part of an outsourcing solution that enhances service and reduces operating expenses over the long-term. Technology can reduce headcount so providers who are only interested in labor placements will not eagerly recommend technologies that may benefit a firm. Technology recommendations in Mail, Print and Office Services consist of the latest generation of digital multi-functional devices (MFDs), document management and workflow solutions, cost recovery, mail imaging, automated receiving, asset tracking, shipping systems, file archiving, x-ray machinery, mail sorting, internal tracking & SLA compliance, print job submission, asset & service request tracking, and performance dashboard, to name a few.
· Business Transformation Outsourcing (BTO) vs. Business Process Outsourcing (BPO) - The very best outsourcing companies transform a service program as opposed to simply taking it over. They introduce new service offerings such as: digital mail, mail security, Intelligent Delivery Lockers, and/or Virtual Reception Technology. Examples of what transforms a services program can simply be the introduction of on-site color copy/print where there was none, introduction of technologies for on-site pagination and imaging, or new safety and security protocols for a mail operation. Transformation can also come in the form of recommendations to completely reengineer entire programs. This can include off-site mail hubs, closing of onsite press printing, mail imaging (digital mail), off-shoring of word processing and file imaging.
· Flexible Pricing Models & Contract Terms - A true service provider can present multiple pricing models based on customer needs and flexibility in their contract to account for client changes. The contracts should account for separation of management services, ability to modify staffing levels without penalties, or ability to adjust a percentage of technology to name a few.
· Service Level Agreements (SLA’s) - SLA’s contain a description of provided services and are required for successful services. Sound SLAs should achieve 5 key results: establish the service baseline, ensure accountability of the program, measure services, choose the measurement method, and establish the measurement requirement. Also, companies should be allowed to frequently revisit and change the SLA. A sound SLA will be the working document for services execution through the lifetime of a firm’s outsourcing arrangement and will allow for services modifications as business conditions within a firm change – expansion, contraction, or merger.
· Performance Measurement & Key Performance Indicators - A successful program is one that is continuously measured. The critical management tools and reported information one should receive from its outsourcing supplier include monthly operating volumes accompanied by service score cards with Key Performance Indicators (KPIs), customer interaction vehicles (customer satisfaction surveys), and semi-annual and annual reviews (Supplier Business Reviews – SBRs). Key Performance Indicators take services compliance beyond simple reporting. Reporting numbers and trending activity are important as they allow organizations to plan and respond to evolving activity, but KPIs better define the quality of a services program. In Mail, Print and Office Services, KPIs can be established for customer satisfaction, management responsiveness, service commitments and staff turnover.
· Risk / Reward - A quality services provider should be willing to put a portion of their fee at risk as a poor performance penalty. Conversely, buyers should be receptive to rewarding exceptional performance. Risk/Reward should not be confused with service penalties. Service penalties are one dimensional and do not reward the provider for exceeding service commitments. They simply punish for failed execution. Risk/Reward are tied to metrics, established SLAs and KPIs. Once these are established, a prudent risk/reward program can be developed. For example, a simple risk/reward clause will call for X% penalty for services below baselines and X% of a bonus for exceeding those commitments.
Identify relevant best practices in all of your outsourcing endeavors and make best practices a part of your services investigation or negotiation. Keep an open mind, do your exploration and see how you can raise the bar in your company by outsourcing processes and tasks. Efficiency, productivity and profits will all be positively affected.