In Sourcing
Business Knowledge Test
What does UPS do?
- Delivers Packages
- Provides Logistics Services
- Drives fashionistas crazy with the never-trendy brown
- Repairs laptops for Toshiba
- All of the Above
In order to reduce costs and speed up repairs, Toshiba handed over its laptop repairs in North America to UPS. Now when a Toshiba laptop malfunctions, a UPS truck picks it up and delivers it to the computer repair depot at the nearest UPS hub that same day. The computer is repaired the next day and returned the following. Faster and cheaper.
What does CGI do?
- Provides computing services for large corporations
- Charges lots of money for consulting
- Provides insurance adjustment and evaluation services
- All of the above
CGI started life off creating and managing large computer systems for large companies. As they grew and expanded they started managing the data entry for these companies. At that point they realized that in fact they could also handle the data collection for their clients.
If you answered all of the above to both questions then you know that Insourcing exists.
Now the next big questions:
- What is insourcing
- Why are companies doing this
- How can I participate
Insourcing Defined
Insourcing is when Company B entirely takes over a complete process in Company A and fully integrates its staff and processes into that of Company A so that no one knows the difference.
Why Insourcing
From the Insourcee’s perspective (service recipient) it allows them to focus on doing what they do best. Insourcing ensures that qualified companies are keyed right into the process in a way that keeps costs in line and doesn’t slow down processing. Insurance companies can focus on managing risk and increase investment returns if they have CGI focus on collecting and processing insurance claims and new policy data.
From the Insourcer’s perspective (service provider) it allows them to provide an added-value service that they can charge more for. UPS gets more money per transaction for computer repairs than for delivering packages. As well if you are providing a fully-integrated service for a company, it is less likely to change service providers. Increase revenue + Consistent Revenue = Big Financial Advantage.
How can I participate
You have to do a serious analysis of your client base.
- Review the services you provide for them.
- Understand what their real strengths are and what can you do to help them focus on those strengths.
- What do you need to charge to make it worth your while?
- What is the client size that best suits your company
You also have to look at your operations and see if you can actually integrate your operations into someone else’s. Remember that your business has to look, think and operate like their business. Then multiple that by 10 times and you’ll understand the investment necessary to make this happen.
