I’ve been thinking about how collaboration has been increasing in acceptance over the last couple of years and this has gotten me to thinking about how it is comparable to the early days of outsourcing. GE was probably the most famous for outsourcing in the early days and quickly became the poster example of the benefits (focused on cost) that could be achieved through outsourcing. We seem to be following a similar trajectory for the popularity and acceptance of collaboration. Both the collaboration and outsourcing models can provide benefits to the organization and network and in addition, you should not think that both of these models are mutually exclusive. The increase in popularity of collaboration should be viewed by the strategic thinker as another tool in the toolbox that should be used based on the need and the objective of the initiative.
There are some objectives or services that after evaluation may be perfect candidates for outsourcing and others the would be perfect to support by developing a partnership relationship and collaborating within a network. A good example of an activity that might make sense to outsource is printing, or janitorial services.
There are some objective or services that after evaluation may be perfect candidates for developing a partnership to collaborate with another organization or even network to achieve the benefits. In the supply chain network I think a great candidate for developing a collaborative partnership is transportation. Developing, or joining, a network of transportation providers is a great method to ensure the most efficient means of delivery for all of the partners involved. This would allow you to traverse from ocean to rail to truck to utilize the most efficient method for the need and the partnership supports the members in sharing and coordinating from origin to destination.
There are some objectives or services that seem to straddle the fence between outsourcing and a collaborative partnership. These are a hybrid service or example where it might make sense initially to outsource to the provider and after a period of time you determine that developing a collaborative partnership would increase the value to both organizations. Again in the supply chain network a good candidate or service that could start with outsourcing and develop into a collaborative partnership is 3PL fulfillment. As an example when an organization is just starting out it make sense to contract with a 3PL provider to handle all of the fulfillment or logistics, then as the organization grows and develops they would naturally grow into a partnership model where the benefits could be shared.
The point of this discussion is that you should evaluate the type of relationship you enter into with another organization just as you would any other objective to determine whether the objective would fit the outsourcing or the collaborative partnership model. You should regularly evaluate the decision based on how the relationship and the needs have matured and changed. The decision that makes sense today may not make sense in a year or two or ten. Outsourcing and collaborative partnerships are additional tools in your toolbox don’t fall into the trap that one tool fits all needs.
And now for the audience participation portion of the show…
Have you discussed with your leadership how to select the type of relationship to enter into with a new potential partner? What questions do you answer in order to determine the model? Do you re-evaluate your relationship on a regular basis in order to revise the relationship?