By Dan Berthiaume
Properly applied, the BPO model can bring excellence to the components of the supply chain which are not the client’s core business to improve throughput and visibility, while simultaneously benefiting from more than 30% reductions in operating costs and potentially significant improvements in customer services. In particular, BPO can help companies achieve orchestration, collaboration and independence in their supply chains.
The Capgemini white paper “Orchestration, Collaboration & Independence” details exactly how the BPO model can be adapted to serve the supply chain needs of clients. Following is a brief synopsis of how BPO can aid users’ supply chain efforts in each of these three areas.
Orchestration Offers Benefits throughout Supply Chain
Outsourced supply chain orchestration, or the integration of the components of people, process, technology and business accelerators to achieve optimal solutions for end-to-end processes in the supply chain, can deliver the lowest sustainable cost of operations consistent with the target quality and customer services. More specifically, outsourced supply chain orchestration can provide benefits in the areas of process excellence, IT, visibility, and sustainability.
In the area of process excellence, orchestration includes the deployment of global process models for standardization and accelerative tools such as business insight and analytics. In the area of IT, orchestration includes integrating cloud computing, SaaS, contemporary workflow tools, business process management and business intelligence systems, as well as legacy systems.
In the area of visibility, orchestration provides a seamless view of third-party systems from logistics providers, freight forwarders, banks, regulators, road, rail, air and ocean operators, coordinated with client legacy systems and cloud-based point solutions. And in the area of sustainability, orchestration ensures that supply chain activities incorporate new key performance indicators (KPIs) such as CO2 footprint and water consumption and include built-in sustainability management tools and features.
Collaboration Reduces Costs
Outsourced supply chain collaboration, which combines the supply chain activities of similar companies (possibly even competitors), can deliver cost reductions of more than 20% in the areas of transport costs per pallet, handling costs per pallet, lead times, and CO2 emissions per pallet.
Furthermore, in recent trials, Capgemini BPO supply chain management demonstrated through a working model that step change reductions in CO2 foot prints of freight operations by as much as 40% are possible through collaboration, independent orchestration and optimizing shared loads and via a multi-modal shift. The model also brought additional benefits of improved operating costs.
Independence from Internal and External Efficiency Roadblocks
Supply chain BPO can also produce cost savings by providing the client independence from internal and external roadblocks to greater supply chain efficiency. For example, for most companies lacking the economies of scale in their shared centers, internal shared services can be limited in its ability to deliver all of the benefits that could be available if that center were outsourced to a third party.
Capgemini estimates that in small-to-mid-sized internal shared services centers, there is typically at least 15% of residual benefit unexploited due to the constraints of being an internal cost center, compared to an outsourced solution with contractual commitments to deliver the targeted outcome.
Independence from the client base and the logistics provider network also has significant advantages. In the case of the client side, there is a legal imperative created as a result of competition law. Independence from the service providers is also a benefit.
Furthermore, the supply chain BPO provider focuses on the best interests of the client, unconstrained by the asset ownership concerns of the third-party subcontractors that typically handle logistics, and is contractually committed to deliver the agreed outcome. This independence from the concerns of third-party logistics providers can also facilitate the best possible combination of logistics providers and solutions working on behalf of the client.
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