MailCom 2011 Co Sourcing: An Alternative to Outsourcing

MAILCOM 2011- Washington, DC - February 28 - March 3

Course #: CM379

Title: Co-Sourcing: An Alternative to Outsourcing

Scheduled For: Wednesday, Round 7, 8:15 -> 9:15 am

Presented By: William L. Ware, CMDSM

James P. Mullan, CMDSM

Marlene O’Hare, CMDSM

Nick Staffieri

MAILCOM 2011 - Washington, DC - February 28 - March 3

Alternative Sourcing

The market has changed. With reduced staff and a smaller budget, businesses need to accomplish more with less resources. Alternative sourcing provides the answer.

What are your sourcing alternatives?– In-House– Out-source– Co-Source

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In-House

• You retain complete control.• Beneficial if you have steady, year-round volumes.• Hard to adapt if there are peaks and valleys concerning

your mail volume.• You select the best people for your operation.• More difficult to remove/replace staffing.• Can be an expensive solution because you pay for

salaries/benefits.• Preferred if your organization’s primary business is in the

mail or closely related industry.• Preferred if there are no qualified out-source providers in

your area.

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Out-Sourcing Benefits

• If done right, you can realize immediate savings and cost benefits.

• Allows you to focus on your core business and lets experts run your mail operations.

• Allows you to bring in subject matter experts (SME).• You are not responsible for staying current with state of

the art equipment.• Depending upon your contract, can help you share

liability issues.• Gives predictable and stable costs over the length of

your contract.

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Downside to Out-Sourcing

• You greatly lose control of your mail operations.• You rely on them to provide the best people.• Can expose you to more risk.• Their quality standards may not meet your expectations.• An outside group is not necessarily familiar with your

operation and business.• May be an extensive learning period to adapt to client

expectations.• Longer term commitment, usually three years or more.

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Definition

Co-Sourcing is:– defined as service performed by both internal

staff and external resources.– a business practice where service is performed

by staff from inside an organization and also by an external service provider.

– a partnership where all parties are responsible for the success of the project.

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Co-Sourcing

• Is a combination of both in-house and out-sourced resources.• Allows you to mix and match resources.• The client has more flexibility.• You only retain the best resources to meet your needs.• Can be a bridge from out-sourcing to in-house.• Can be a bridge from in-house to full out-sourcing. • Get to see every day how a potential out-sourced staff

performs.• A co-source solution is less threatening to in-house staff.• Is the best solution for cyclical or variable needs.• Organizations that have peaks and valleys in their volumes

should consider co-sourcing.

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Co-Sourcing Benefits

• Increased productivity• Improved efficiencies• Cost savings• Reduced financial burden• Control• Gain thought leadership• Concentrate limited internal resources• Manage a variable cost structure

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Co-Sourcing Models

• Full-time on-site support• Part-time on-site support• Off-site support

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Wanted from a Provider

• A shared vision• Quality• Price• Capacity• Relationship goals

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Implementing a Sourcing Arrangement

1. Plan and assess – take stock of your current situation, develop your vision for the arrangement, identify potential providers.

2. Select the provider – check potential providers’ experience with like-sized companies in your industry, look for the ability to provide specialized skills and a global reach.

3. Implement – the provider should establish a time line and project plan, spell out its role in the enterprise, and its relationships with other functions.

4. Monitor and report – periodic ongoing communication is critical, regular contact between all parties, and synergies between the in-house team and the service provider.

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Partnership Reasons

• Scope of consulting resources• Leading-edge technology• Global resources• Flexibility

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Forging a Partnership

• Realize operational and financial efficiencies related to staffing costs and technology acquisition.

• Eliminate or reduce staff time spent on transactional activities.

• Become more efficient and effective in the delivery of services to your organization.

• Shift resources to other higher value or strategic areas.• Implement global program consistency, governance, and

reporting.• Mitigate the need to hire staff needed only during peak

periods or for special projects.• Access management expertise.

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A Worthy Partner• Financial stability – if the company is public, review their past

financial statements and filings. If private, evaluate the strength of ownership, including any parent company relationships, request references and look at the company’s history of growth.

• Staff experience and expertise – this is critical if you want a truly consultative partnership. Are they thought leaders? Brainstorm with others about what you need in an outsourcing partner, and don’t be afraid to use a consultant to help with the process.

• Best-of-breed operational and technology systems – your provider should have top-tier technology. They should also work with their own strategic or outsource partners.

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An Alternative Sourcing Plan

• Having an alternative sourcing plan is an opportunity that no organization, regardless of size, should dismiss without careful investigation.

• Organizations must change to survive and innovate to thrive.

• With an efficient and focused alternative sourcing partner ready and able to respond to your needs, organizations will be best-positioned to navigate the turbulent waters of both today and tomorrow.

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Why Employ Alternative Sourcing Strategies?

• To put the right tools in place – at the appropriate cost.

• To gain or leverage expertise.• To avoid unnecessary capital investment

or infrastructure.• To free up resources.

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Results from Alternative Sourcing

• Significant cost improvements• Gained business expertise and knowledge• New way of thinking• Executive/management time freed up• Flexibility and scalability

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Opportunities for Alternative Sourcing

• Customer Service Support• Printing Services• E-commerce• Order Management and Fulfillment Systems• Enterprise Data Management• Remittance and Lockbox Processing• Enterprise Payments• Mail Services• Warehouse & Distribution• On-Demand Applications

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The Process

Strategic Business Planning -

1. Pre-Research2. Resource Identification3. Criteria Establishment4. Due Diligence5. Decision Making6. Communication7. Execution and Evaluation

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1. Pre-Research

• The million dollar question:

“What are we trying to accomplish?”

• Request For Information (RFI)

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2. Resource Identification

• Due Diligence Team• Internal Resources• Existing Partners• Industry Experts• Consultants

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3. Criteria Establishment

• Shared Vision• Quality• Price• Capacity• Relationship

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4. Due Diligence

• Establish a plan• Go in with an open mind• Do not rush the process• Request For Proposal (RFP)

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5. Decision Making

• Measure and evaluate pros and cons

• Conduct full cost analysis• Executive presentation /

recommendation• Contract negotiation

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6. Communication

• Buy-in• Education• Community and media

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7. Execution and Evaluation

• Execution and conversion• Clarity is the key• 2 companies = 2 languages• Project management• Resource allocation• Evaluation

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Best Practices in Alternative Sourcing

• Identify benefits and risks of alternative sourcing to your organization.

• Determine methods of alternative sourcing that are best for your organization.

• Select the most appropriate business functions to out-source and/or co-source.

• Choose partners that are ideally suited to collaborating with you on these business functions.

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Consider the Following:

• The goal is always Customer Satisfaction. Never lose sight of what drives your decision.

• The rewards must always out weigh the risks. Do not make a decision without weighing all the options. Do not make a decision to change your sourcing unless it fits your organization and corporate culture.

• Pricing is important, but not the most important variable. What good is getting the lowest price if the sourcing solution does not fit your needs?

• Timing is crucial, but not always a deal maker or breaker. Is it the ‘right time’ to make the deal?

• Knowing what to buy. What is the real ‘value-added’ that the sourcing provider will bring to your organization? Can you do it better and with less costs in-house?

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Co-Sourcing: An Alternative to Out-Sourcing

Questions ?

Comments ?

Thank You

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Contact Information

William L. Ware, CMDSMSenior Site ManagerOce Business Services, Inc.Time Inc.1271 Ave. of the Americas, SB-66New York, NY 10020212-522-9258 [email protected]

Marlene O’Hare, CMDSMLinde North America, Inc.575 Mountain AvenueMurray Hill, NJ 07974908-771-1275 officemarlene.o’[email protected]

James P. Mullan, CMDSMNational Account ManagerOce Business Services, Inc.Chubb & Son15 Mountain View RoadWarren, NJ 07059908-903-2869 [email protected]

Nick StaffieriSenior Group Operations ManagerMCS Management Services1601 Market Street, Suite 800Philadelphia, PA 19103215-405-8190 [email protected]

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MailCom 2011 Co Sourcing: An Alternative to Outsourcing

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Transcript of MailCom 2011 Co Sourcing: An Alternative to Outsourcing