Outsourcing

As businesses search to realise greater efficiencies within their operations, the outsourcing of previously perceived core functions is increasing - the gains can be great but the risks in getting it wrong are significant.

Our work with clients and research with Cranfield University on ‘Competitive Space’ has shown that the outsourcing of non-core activities is a well established and growing competitive differentiator across a broad cross-section of industries.

Outsourcing objectives can be as simple as operating cost reduction, reducing capital investment and overcoming periods of instability. However, many companies need more complex relationships that support new market penetration and financial restructuring.

Whatever the reason, the solution needs to be both commercially robust and operationally sustainable.

There is an increasing requirement for sophistication and innovation on the part of the outsource service providers as they take on the delivery of ever more complex supply chain requirements. LCP is able to provide the crucial benchmarks and reviews of the major outsource service providers and their capabilities. LCP can also coach their teams to understand the full requirement to deliver the business case.

LCP has a proven structured method that helps its clients identify what parts of the operation should be outsourced - with the associated business case, risk profile and road map - and directs the process of identification, tender development, selection of a partner and setting-up the right commercial agreement and benefits realisation programme.

We have:

• re-defined the way in which a major UK retailer outsourced its logistics, resulting in the consolidation of providers and an estimated tens of £millions savings in logistics costs
• reduced the costs of transport for a waste management company by 20% by analysing the true costs of transport and re-tendering the contracts on a new basis
• delivered a tailored approach for a global energy company to create and let international haulier tenders around the world; including providing a short list of suitable regional and global service suppliers. This process has saved hundreds of $millions since its inception.

Research recently completed by LCP with Cranfield identified that successful innovation in outsourcing logistics services is most dependent on the quality of the relationship, which in turn is driven by new contract frameworks and performance management regimes.