The 3Ps of inside-outsourcing
Inside-outsourcing occurs when a scope of work being outsourced is actually performed inside the walls of a customer’s facility, as opposed to being completed off-site. This minor difference adds a level of complexity to providing services, making the business very puzzling for inside-outsourcing service providers (IOSPs). Not only do they face the need to complete service requirements within agreed-to contractual obligations, they also need to integrate their employees with customer employees. Many IOSP management teams spend their days operating within a maze, trying to figure out this puzzle on how to be successful.
The 3Ps provide IOSPs with a clear path forward that turns their maze into a labyrinth. Unlike a maze, a labyrinth has one path that leads you both in and then back out. All you need to do is recognise and follow the path.
The 3Ps operate intertwined. Each P contains requirements that interrelate, and for the model to fully function, each of the Ps must have a disciplined level of focus.
- Why is this service being outsourced?
- What is being outsourced?
- What unique value do you bring to this inside-outsourcing opportunity versus your competitor?
- How will your customer measure the value you deliver?
- Do you have the processes in place to deliver the value your customer seeks?
- Do you have the processes in place to realise the value without exposing yourself to uncontrollable risk?
- Do your current processes have the capacity to handle the addition of this new inside-outsourcing opportunity?
- Do you have the talent within your organisation to deliver the value sought by your customer?
- Are the values of your company aligned with the core reason the work is being outsourced?
- Does this inside-outsourcing opportunity enhance or dilute your brand?
- Is this inside-outsourcing opportunity a good cultural fit?
The Purpose is “why” the scope of work needs to be done, the Process is “how” the scope of work will be done, and the People are those who will perform the scope of services. Each of the Ps is a critical leg of the path through the inside-outsourcing labyrinth. If the Purpose should change, the Process and People will need to change as well.
This simple 3P approach to inside-outsourcing gives a model for both the service provider and the procurement group challenged to locate a service provider, to ensure:
As IOSPs, we all want to be in positions where we are a business solution for our customers. If we are not providing business solutions, we are condemned to providing commodity services, deemed interchangeable at any time with anyone. In a previous article ‘The Roots of Inside-Outsourcing‘ (published August 4th, 2014), I wrote on how the automotive industry embraced inside-outsourcing as a strategic lever to being more competitive. Although the need to be competitive was fairly common with all of the automotive manufacturers, how they sought to achieve that competitiveness differed significantly.
Over my 40 years, I found it very common that services slated for outsourcing were typically in areas of a customer’s business where they did not wish to dedicate resources. In all of these situations, the Purpose for outsourcing was to locate an IOSP who was able to perform the scope of services more effectively and efficiently than the customer was able to do. The customer knew their strategic need of being more competitive relied upon finding an IOSP more capable of performing the scope of work than they could themselves. In these situations, the customer also expected the IOSP to be able to focus all of their energies into improving how the scope of services was performed, and/or eliminate the need for the scope of services through alternative solutions.
In other situations, the customer sought to achieve a level of competitiveness by outsourcing a scope of work that contained an inherent level of risk. One risk we commonly faced was the outsourcing of services inherently dangerous, like high heights, confined space, pinch points, slips and trips, and repetitive motion.
Depending in which of these situations we found ourselves, our Processes and People were adjusted to align with the Purpose of that situation. If we did not have capable Processes and People for a particular situation, we failed. Whether the customer was looking to partner for improvement or a supplier to unload risk, the Purpose was scrutinised to ensure the opportunity “fit” our brand. Depending on your brand and culture, both of these situations may be very successful business opportunities. If your culture is not experienced in higher-risk services, that situation and scope may not align with your brand. When a scope of services is inherent with safety risks, a very capable safety process is required. The safety process must identify the safety concerns, re-design and engineer out the concerns, and then implement safe, effective practices to complete the services. The team of People you assigned in this situation will need to be accustomed to working in an environment where safety cannot be taken for granted. Alignment of your culture, capacity, and capability can be realised by aligning the 3Ps.
Not every customer is “right” for every IOSP. Not every scope of service is “right” for every IOSP. An IOSP, by embracing the 3Ps, can better determine what is “right” for them. A customer, by embracing the 3Ps, can determine which IOSP is “right” for them.
In upcoming articles I will further delve into each of the 3Ps, and outline steps taken within each of the Ps to ensure continued success.
About the Author
Damian Scallon is currently a consultant with Pathway Guidance in Cincinnati, Ohio and is finishing a book called The Outsourcing Conundrum. Prior to recently moving into being a writer and a consultant he was the Vice President of Operations at Robinson Solutions & Voith Industrial Service and had responsibility for several hundred locations located throughout Canada, USA and Mexico. For the past forty years he has spent a majority of his time servicing the automotive industry and has witnessed and participated in the growth of what is known as inside-outsourcing, where the services are performed within the walls of the customer’s facility.