A Guide to Outsourcing

There are many reasons why your company may select to outsource their non-core business activities. Typically this list includes:

• Reduce labor costs
• Obtain professional expertise
• Upgrade or improve business technologies
• Implement the latest business practices and specialized procedures
• Navigate business-cycle fluctuations
• Set a course for future growth and flexible operations strategy
• Improve customer satisfaction
• Create additional value by improving quality and increasing productivity

The decision to outsource must be accepted within your entire organization. Ultimately you will base your decision on the conclusion that outsourcing will create a long-term strategic advantage for the entire operation of the company.

Define Your Core Business

An initial step in the development of an outsourcing plan is to list the basic areas of your organization that are considered to be core business activities. Many manufacturing companies list Sales and Marketing, Research and Development, Production, Assembly, Packaging and Product Distribution as the key areas of their core business.

Once the core business has been defined the direct and indirect support services to the core business may be identified and listed. Based on the items identified as support services the tasks to be outsourced become clear.

Selecting an Outsource Partner

The selection of an outsourcing partner is a function of a shared understanding and respect for your existing corporate culture and the development of a trusting relationship based on the integration of a new service provider into this culture. Second, the outsourcing partner must meet basic professional business criteria such as:

• Performance track record with established clientele
• Documented Policies and Procedures
• Understanding of the latest technologies
• Established safety guidelines
• Demonstrated Best Practices for clientele of similar type, size and complexity
• Professional business and technical infrastructure within the current organization

Discuss Mutual Goals

After the selection of a preferred Outsource Partner, the next step is a detailed discussion of the job assignment by the two parties. From the outset of the assignment, the Outsource Partner must have a clear understanding of the goals that you want to achieve. Communicate with the Outsource Partner so that a common agenda may be formulated. However, the process to implement and accomplish the required results is ultimately the responsibility of your Outsourcing Partner. By following the steps outlined in this guide you will establish the foundation for a professional, long-term relationship with your selected Outsource Partner that will reduce costs, increase productivity and improve customer satisfaction today and into the future. 

About the Author

William D. Hibbard is the Director of the Grubb & Ellis Industrial Facility Management group. Mr. Hibbard holds an M.B.A. from Boston College and a B.S. in Mechanical Engineering from Marquette University. He is a registered Professional Engineer in New York, Pennsylvania and Kentucky.