Outsourcing -- Insourcing Can vendors make

Outsourcing became fashionable in the late 1980s, came of age in the 1990s, and is now a normal part of corporate life. Written by well-known and respected business authors and incorporating new research from Copenhagen Business School, this book covers the newest elements of outsourcing today and discusses how strategic alliances should be established between the buyer and supplier. Topics explored throughout include the scope, scale and importance of what is outsourced; the pricing and risk sharing involved; and changes to organizations which lead them to seek more outsourcing.

Per V. Jenster is a Professor at Copenhagen Business School, where he has held the post of Associate Dean with responsibilities for various MBA programs. He was formerly a professor of marketing at IMD, Lausanne, Switzerland. He completed his doctorate in Strategic Management at the University of Pittsburgh and was later a faculty member at the University of Virginia. His industry experience includes extensive consulting in the areas of strategic management, marketing planning, competitive analysis and cost evaluation studies, and his research is widely published in books, articles and case studies.

Henrik Stener Pedersen manages Oxford Research, a Copenhagen-based international research company. He obtained his PhD from Copenhagen Business School, focusing on outsourcing and quality management, and has conducted studies and analyses in the fields of globalisation, HR policy, competence development and labour market issues.

Patricia Plackett holds a PhD in anthropology and is currently completing a PhD in industrial economics and strategy at Copenhagen Business School, where her research focuses on radical innovations. She has lectured in various MBA and other programmes. Her career also includes management positions in Canada and New Zealand.

David Hussey was for many years a well-known authority on strategic management, and wrote or edited more than thirty books. He spent fourteen years as Managing Director of Harbridge Consulting Group and was experienced as both a practitioner and a consultant to major global companies across many sectors and industries. He was a founder of the Strategic Management Society, Founding Editor of the Journal of Strategic Change, a director of the Japan Strategic Management Society, and a visiting professor at Nottingham Business School. For his contributions to the effective application of strategic management practices he was awarded the Japan Strategic Management Society Ansoff Award in 1999. David Hussey died in January 2003.

Preface

ix

Introduction

xiii

1 Understanding the opportunities

1

(26)

Introduction

1

(1)

What is outsourcing?

1

(1)

The origins of outsourcing

2

(4)

Trends and pressures

6

(4)

Influential concepts

10

(5)

Outsourcing today

15

(1)

Traditional activities

16

(2)

Peripheral 'activities

18

(2)

Critical activities and processes

20

(2)

Strategic and problem-solving activities

22

(2)

Summary

24

(1)

References

24

(3)

2 Moving to supplying total solutions

27

(20)

Introduction

27

(1)

Management issues for outsourced activities

27

(1)

Traditional activities

28

(1)

Peripheral activities

29

(2)

Critical activities and processes

31

(1)

Case study: The 1999 crisis at the UK Passport Agency

32

(11)

Strategic and problem-solving activities

43

(1)

Case study: The European Chewing Gum Company (identity disguised)

44

(2)

Summary

46

(1)

Reference

46

(1)

3 Retooling marketing and the sales force

47

(22)

Introduction

47

(1)

The search for a better way to trap mice

47

(4)

Market segmentation variables

51

(2)

Segmentation approaches

53

(2)

Criteria for initial screening

55

(1)

Evaluating potential segments

56

(2)

Defining the market

58

(1)

Timing, niche markets and global considerations

59

(2)

Sales force management in a changed environment

61

(1)

Sales force development for supplying total solutions

62

(1)

Building sales force capabilities

63

(2)

Summary

65

(1)

References

66

(3)

4 Managing buyer/supplier relationships

69

(36)

Introduction

69

(1)

The challenges for suppliers

69

(3)

Case study: Timex Dundee (after Martin and Dowling, 1995)

72

(5)

Case study: IBM Denmark

77

(15)

Supplier Challenge 1 The need for additional competencies

79

(3)

Supplier Challenge 2 Managing the entry phase

82

(8)

Supplier Challenge 3 Running the contract

90

(2)

Case study: Driver and Vehicle Licensing Agency (DVLA), UK

92

(5)

The challenges for buyers

97

(5)

Buyer Challenge 1 The pre-bid phase

99

(1)

Buyer Challenge 2 Identifying the key suppliers

100

(1)

Buyer Challenge 3 Awarding the contract

101

(1)

Buyer Challenge 4 Running the contract

102

(1)

Summary

102

(1)

References

103

(2)

5 Pricing solutions and managing risks

105

(16)

Introduction

105

(1)

The value of strategic pricing

105

(1)

Fundamental pricing concepts

106

(3)

Pricing the bundle of goods and services

109

(2)

Pricing when distributors are involved

111

(1)

Price administration

111

(4)

Understanding the risks to suppliers and buyers

115

(2)

Mechanisms for bridging uncertainties

117

(1)

Summary

118

(1)

References

119

(2)

6 'Transitioning' human resources

121

(14)

Introduction

121

(1)

Setting the scene

121

(3)

The fundamentals

124

(2)

Strategies for employee transfer

126

(4)

Pitfalls and critical factors

130

(2)

Summary

132

(1)

References

133

(2)

7 Structuring 'next generation' IT solutions

135

(18)

Introduction

135

(1)

The changing role of IT departments

135

(1)

The real problem with IT investments

136

(2)

What ROI?

138

(2)

IT: Overadministrated and undermanaged

140

(2)

The IT paradox

142

(3)

The 'next generation' approach to IT

145

(4)

Summary

149

(1)

References

150

(3)

8 Achieving quality in outsourcing

153

(16)

Introduction

153

(1)

Understanding the role of quality management

153

(4)

Defining quality for integrated products and services

157

(3)

Challenges: Leadership and strategy

160

(2)

Challenges: Processes

162

(1)

Challenges: People

163

(1)

Factors conditioning quality management

163

(3)

Summary

166

(1)

References

167

(2)

9 Getting a good slice of a larger pie

169

(14)

Introduction

169

(1)

The outsourcing pie

169

(2)

How good are we at making larger pies?

171

(4)

How sellers can make the pie larger

175

(1)

How buyers can make the pie larger

176

(2)

In the final analysis

178

(1)

The Claimpower story

178

(3)

Summary

181

(1)

References

181

(2)

Index

183

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Outsourcing -- Insourcing Can vendors make money from the new relationship opportunities?

Summary

Author Biography

Table of Contents

Supplemental Materials