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Outsourcing — contracting products or services formerly performed in-house — has been around for a long time. Walter Chrysler pioneered outsourcing early in this century and built a major car company. WD-40, a best-selling lubricant, has long been outsourced — the can reads "manufactured for the WD-40 Company."
Making Outsourcing Decisions
As supply chain management has prevailed, outsourcing has become an acceptable way to do business for several reasons, including:
Follow-up Practices and Procedures
Strategic outsourcing is a dynamic process that requires continual evaluation. The objective of both parties should be to achieve a long-term business relationship that is open and responsive to continuous improvement. Your outsourcing supplier should be a partner; you are handing over your non-core operation to someone else who is providing expertise on your behalf. What you should seek to achieve is a strategic alliance that treats your supplier as a defacto extension of your organization. Because this partnership requires managing and nurturing, it's at this point that the work really begins. Implementation and continuance require the effort of both parties. Anything less than total commitment can lead to failure.
NORBERT J. ORE, C.P.M.
Norbert J. Ore is director of purchasing with IPD/Paper Division, Sonoco Products Company, Hartsville, South Carolina. Mr. Ore, an active NAPM member, is chair of the NAPM Educational Advisory Committee. With over 20 years experience in the private and public sectors, he is a frequent speaker and seminar presenter for NAPM, as well as a contributor to Purchasing Today (formerly NAPM Insights). Mr. Ore is a member of the National Commercial Panel of the American Arbitration Association. A baccalaureate of Marshall University, Mr. Ore has also done post-graduate work at the University of Utah.
- The Alliance Analyst, June 26, 1995, "On the Edge of Outsourcing"
- The Executive Brief (Society for Information Management), Winter 1995
- Harvard Business Review, January-February 1993, "Customer Intimacy and Other Valuable Disciplines"
- Leenders, Michiel R., D.B.A. Meaningful Involvement: Purchasing and Outsourcing, First Worldwide
Research Symposium Proceedings, 1995
- NAPM Insights, June 1995, "Outsourcing Purchasing Responsibilities"
- Purchasing, October, 20, 1994, "Contract Logistics: It's About Costs"
- Purchasing, April 6, 1995, "Value Added Turns Legit"
- Purchasing, May 18, 1995, "Outsourcing: It's a Whole New Ballgame"
FOR FURTHER READING
- McKeller, John, D.B.A., C.P.M. Beyond Make vs. Buy - Using a Systematic Approach for the Evaluation of
Outsourcing Decisions, Proceedings of the Purchasing Executive Institute, Cornell University, 1995
- The McKenzie Report, March 1994
- Minoli, Daniel. Analyzing Outsourcing: Reengineering Information and Communication Systems,
- Mylott, Thomas III. Computer Outsourcing: Managing The Transfer of Information Systems, Prentice-Hall, 1995
- NAPM Insights, October 1993, "The How To of Outsourcing Contracts"
- NAPM Insights, May 1994, "International Outsourcing: A Current Analysis"
- NAPM Insights, July 1994, "Purchasers Should Become CEOs of Outside Resources"
- NAPM Insights, March 1995, "Meaningful Involvement: Purchasing and Outsourcing"
- NAPM Insights, June 1995, "Inside vs. Outside ...and How Much"
- Robertson, Ian and Rothery, Brian. The Truth About Outsourcing, Gower, 1995
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