In Search of a Better Way to Outsource
A Better Approach: The Rise of Vested Outsourcing
|Illustration 1. Vested Outsourcing Performance Partnerships take the Preferred Supplier relationship to a whole new level.|
|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
|Illustration 3. Vested Outsourcing is based on a "What's 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
|Illustration 5. Vested Outsourcing Implementation Plan.|
- 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