About this course
Quick, take a guess what is the most outsourced service on the earth today? Think of all the potential services in your company that can be outsourced; cast your mind far and wide.
Try not to miss anything. Once you have thought of potentially every service that can be outsourced, make the guess again. Out of everything that possibly be outsourced.
If you guessed call centers, you are wrong. In fact, if you guessed any of the following services – Logistics, IT, sales training, fleet management or payrolls – all popular services to be outsourced, you are wrong too.
I will tell you the most outsourced service on earth today somewhere within this chapter.
What else will you find interesting in this chapter?
You will learn to recognize how ubiquitous outsourcing is the modern day organization and life, and how to keep your eyes open to recognize situations that are amenable to outsourcing.
When you see the full list of all the activities within a company that can be outsourced, it may surprise you a bit.
You will also learn why you must NOT outsource in some circumstances because of strategic or tactical reasons. In our work we frequently meet people who are dogmatic about outsourcing – on both sides of the fence.
We have met directors serving on boards of large organizations who are deal against outsourcing. On the other hand frequently we meet people at all levels in organizations who would rather outsource than do the tasks internally.
When asked as to which way do we lean, our answer is almost always – it depends. Indeed, there are situations where you must NOT outsource.
However, there are situations where you must outsource. We have come across situations where companies are reluctant to outsource in situations where that would have been the best course of actions.
We will examine some of those criteria in detail in this chapter. However, there is another set of criteria or measures that are equally important.
Outsourcing being now so ubiquitous, is there a way to distinguish between a good outsourcing arrangement and a bad one.
We will see a few key measures focused on the outcomes that your company (or the outsourcing company) is seeking from the arrangement.
Ask 100 people W hat image comes to mind when they think of outsourcing , and 99 people will describe a sweatshop in China or Bangladesh, or a call center in India or Philippines.
No doubt these are somewhat stereotypical images of outsourcing conveyed by the media, but let me describe the other end of the continuum.
To understand its full potential, as well as the barrage of debate surrounding outsourcing in the modern business networks , let us look at Boeing as a brief case study.
Its 787 Dreamliner has been one of the most innovative and costliest projects on Earth today.
From the beginning it was apparent that to keep up with Airbus and to create the next generation of airplanes, Boeing would need extensive cooperation of the best in the world.
The most noteworthy feature of the 787 Dreamliner productions is perhaps the fact that out of the entire airplane, only one part – the tailfin – is manufactured by Boeing itself.
The rest of the plane – the fuselage, the engines, the avionics, the landing gear, even the wings are all manufactured by the outsourced service providers all over the world.
Secondly, since sections of the fuselage are baked hard in autoclave ovens, purpose built large autoclave ovens are installed in various locations of Boeing’s outsourced service providers.
Some of the biggest autoclaves in the world were built for the 787 project. The one in Wichita, Kansas is 30 feet in diameter and 70 feet long.
For the first time ever, the wings of the Boeing Airplane are made overseas by Fuji in Japan. A purpose built plant with cutting edge technology and capability to use carbon fibre helps Fuji meet Boeing’s rigorous standards.
Fuji not only builds the wings and parts of the fuselage that hold the wings but also works with Boeing to fine-tune the design specifications to meet the stringent strength and stability requirements.
Sub-assemblies are brought to the final assembly plant in Everett, Washington in a special plane called the Dreamlifter.
It has a swing tail that opens out and a large cargo loader unloads the pieces coming from Italy, Japan, South Carolina and Kansas.
Moreover, the wings come from Japan, the horizontal stabilizers come from Italy, the engines from Rolls Royce in England, landing gear from Messie-Dowty in France, and the largest section that comes in a single piece is the 85 feet long mid-section of the fuselage, built by Global Aeronautica in Charleston, South Carolina.
The story of production of Boeing’s 787 Dreamliner is a poetry in motion and a true global supply chain in action.
At the time it was envisaged, this business network attracted a lot of positive and negative publicity.
However, it is clear by now that the new product development time was shrunk, the capital cost of development as well as risk was reduced significantly as a result of extensive outsourcing.
* This Quiz has 5 questions ( Estimated Time - 2 Minutes)
In fact, the possibilities are endless once you realize all the permutations and combinations of various parts of the market engagement process.
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