B2B Outsourcing Solutions Seen Yielding Significant Value in Stanford Study

Survey shows companies outsourcing B2B programs streamline interactions with suppliers and customers, benefit from superior technical capabilities, Hau Lee says

Gaithersburg, MD — October 17, 2007 — Companies deploying B2B outsourcing solutions experience a return that is 245 percent greater than their annual investment and a 62 percent improvement in customer satisfaction, according to the results of new research from Stanford University.

The Stanford Global Supply Chain Management Forum, led by recognized supply chain expert Dr. Hau Lee, conducted the research study, which surveyed companies outsourcing some or all their B2B operations with the goal of establishing whether customers benefit from outsourcing and, if so, how and how much.

Conclusions from the study indicate that companies that outsource B2B programs benefit not only from improved customer satisfaction but also from improved B2B technical capabilities, greater competitive differentiation, greater inventory visibility, increased system uptime and availability, as well as increased return on investment (ROI).

The full report is being made available (registration required) through the Web site of GXS, a provider of business-to-business (B2B) e-commerce solutions, which announced the study results this week and is hosting a Web seminar to discuss the results on November 8. GXS' Web site is at www.gxs.com.

Customer Satisfaction, Inventory Visibility Up

The companies participating in this survey spanned the globe and represented a variety of industries, including high-tech, manufacturing, financial services, retail/consumer packaged goods and healthcare. They ranged in size from less than $500 million in revenue to more than $10 billion.

The participants identified the following as their primary business drivers for outsourcing B2B: reducing costs; enhancing B2B capabilities; improving supply chain efficiency; centralizing vendor management and improving customer experience, among others.

Actual benefits reported included:

  • 62 percent average increase in customer satisfaction;
  • 75 percent average increase in B2B technical capabilities;
  • 58 percent average improvement in inventory visibility;
  • 55 percent average improvement in predictability of IT costs; and,
  • 41 percent improvement in B2B system uptime/availability.
In addition, 76 percent of the participants achieved a return that was more than double their annual investment.

The Performance-Supply Chain Excellence Link

"Corporate performance is inextricably intertwined with supply chain excellence. This study demonstrates that companies that outsource B2B programs improve and streamline interactions with suppliers and customers alike, and benefit from superior B2B technical capabilities," said Hau Lee, director of the Stanford forum. "By extension, companies that outsource B2B programs have more efficient supply chains which directly impact corporate performance for the better. The benefits of B2B outsourcing are compelling, and the proof lies in the results of this study."

Additional benefits of B2B outsourcing relate to the reduced need for internal resources to support B2B programs. More than 50 percent of the participants reported reductions in the need for full-time employees to support B2B connections and trading partner interactions.

However, those same companies also experienced a greater level of global B2B support with the availability of local language resources and regional standards support. In addition, the companies were able to reduce their internal training costs associated with B2B standards and protocols.

"For most companies, B2B is a menagerie of standards, protocols, document types and business processes. Managing that menagerie on their own is at best difficult, at worst, impossible," said Bobby Patrick, chief marketing officer of GXS. "More and more companies are beginning to realize that outsourcing B2B programs makes sense and improves their ability to meet customer expectations and gain better insight into their supply chains."