Vested Outsourcing: Game-changing Rules for Outsourcing


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Building stronger relationships and gaining greater value from your outsourcing relationships by moving from win-lose to win-win


By Kate Vitasek and Mike Ledyard

In Search of a Better Way to Outsource







A Better Approach: The Rise of Vested Outsourcing





Transactional

Preferred Supplier

Strategic Alliances

Vested Outsourcing Performance Partnerships take the Preferred Supplier relationship to a whole new level
Illustration 1. Vested Outsourcing Performance Partnerships take the Preferred Supplier relationship to a whole new level.






The best Vested Outsourcing partnerships align the interests of both parties and ensure tangible benefits for both partners
Illustration 2. The best Vested Outsourcing partnerships align the interests of both parties and ensure tangible benefits for both partners.


Changing the Game: Going the Whole Nine Yards with Your Outsource Relationship



  • NOT about achieving 99 percent fill rate for your warehouse provider versus 95 percent;
  • NOT about answering 95 percent of all calls in 20 seconds versus 30 seconds;
  • NOT about going from 3,000 defective parts per million (DPPM) to 3.4 (Six Sigma) DPPMs from your contract manufacturer;
  • NOT about ensuring that janitorial service provider cleans the toilets every two hours;
  • ... and the list can go on and on.



WIIFWe versus WIIFMe







Vested Outsourcing is based on a What is in it for We philosophy
Illustration 3. Vested Outsourcing is based on a "What's in it for We" philosophy.






















The five major rules of the What is in it for We philosophy
Illustration 4. The five major rules of the "What's in it for We" philosophy.

Deeply wedded to the WIIFWe philosophy are the following five major rules.

  • Outcome-based versus transaction-based business model
  • Focuses on the "what" not the "how"
  • Clearly defined and measurable desired outcomes
  • Pricing model incentives optimized for cost/service tradeoffs
  • Insight, versus oversight governance structure

How Vested Outsourcing Rules Work Together











Vested Outsourcing Implementation Plan
Illustration 5. Vested Outsourcing Implementation Plan.
In Conclusion…



www.SDCExec.com/VestedOutsourcing

  • The University of Tennessee offers a three-day open enrollment class at its Center for Executive Education, "Performance-based Outsourcing: Buying Results, Not Activities!" (See http://PBO.utk.edu.) You can contact Bric Wheeler at the University of Tennessee, at BWheeler@utk.edu, for customized, in-house training on PBO for your company. These can be individual companies or a combination of a company outsourcing and their service provider(s).
  • Visit our blog at www.vestedoutsourcing.com and receive additional resources, success stories and insights offered by the authors. You can also request a complimentary e-book that expands on the concepts of this article.
  • Contact the authors at the e-mail addresses with their bios below.

About the Authors: kate@VestedOutsourcing.com

Mike@VestedOutsourcing.com


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