Most businesses today are actively engaged in outsourcing. In fact, offloading of non-core functions is arguably today’s most significant trend in both private and public sectors. Change is being driven by intense, global competition with its constant pressure on finances. Once confined to areas such as legal advice, transportation, and property maintenance, outsourcing now makes sense for many tasks formerly performed in-house by necessity rather than choice.
Here are the characteristics of processes ripe for outsourcing:
- Your company does not already excel in special capabilities the process requires
- Person-time or cycle capacity is limited without hiring and/or capital expense
- Task is either too small or too large to handle effectively
- Process availability is critical and backup is difficult to support internally
- Timely performance is hampered by frequent changes that are out of your control
- Good external suppliers are available and internal start-up costs are high
- Building a core competency in this process does not make your company more competitive
- Opportunity cost is high because other expenditures have better return
- Solving the business problem quickly is paramount
Supply chain electronic data interchange (EDI) is a perfect example of an important business process that matches a majority of these nine criteria for many mid-sized suppliers. EDI is a complicated discipline best performed by experts. Few firms have what it takes to sustain EDI performance internally in a manner that meets ever-changing trade compliance requirements of their customers.
EDI is especially well suited to “managed services,” a type of outsourcing that combines both technology and people to perform just like another department of your company. Delivery in the cloud has fueled growth in managed services by enabling low costs, rapid implementation, and direct integration with other systems such as ERP.
One mid-sized company that decided on managed services five years ago—and hasn’t looked back—is featured in the short video below. See if Schylling’s reasons for outsourcing resonate for you.