vLinx, which sells technology for supply chain execution, hosted a Webinar this morning featuring Paula Rosenblum from Aberdeen Group sharing results of a study about “Sourcing for Innovation.” Although the focus was on retail — and its particular brand of sourcing, which is manufacturing based and usually offshore — there were a couple of lessons I thought worth sharing for an IT outsourcing audience. (That and I don't want to look like I've just wasted 45 minutes on the wrong thing.)
The norm in sourcing deals, according to Ms. Rosenblum, is frequently characterized by complacency in supplier selection once the deal is signed — particularly when it's work being done offshore. Out of sight, out of mind. She says that can result in leaving “15 percent on the table” by virtue of not continually pressing on the deal one is getting.
Another tendency: to throw a “buying office in China and hope the problems go away.” Substitute “buying office in China” with “development firm in India” and the situation is the same.
What's needed is continuous communication and cooperation. In manufacturing sourcing arrangements, visibility into the process most often happens, according to the Aberdeen stats, only after orders have left the factory (that defines 85 percent of sourcing deals). My guess is that could easily classify IT work of a project nature too. You don't really know what you're getting until it's on its way back to you.
The goal, said Ms. Rosenblum, is early reaction time. You can expect to save money through automation and logistics management. Improved collaboration can come about as a result of visibility and knowledge.
Presumably, vLinx sells products that enable that collaboration for a retail environment. But other companies — such as Enlighta— provide similar offerings for IT or business process endeavors.
To download a copy of Ms. Rosenblum's report, go here.