Logistics Information

10 Basic Rules of Successful Outsourcing

Supply-LINQ recommends following the 10 Basic Rules for Successful Outsourcing:-

  1. Develop a Strategy

    • Measure against in-house solution
    • Identify strengths and weakness
    • Include the potential provider in the process
  2. Rigorously Select a Potential Partner

    • Perform a reference check
    • Use a check list to assess potential partners
    • Is the potential partner a cultural fit
  3. Clearly Define Expectations

    • Ensure that information is correct and adequate
    • Some companies lack accurate and detailed knowledge of their own logistics activities
    • Cost of providing service, particularly IT costs are under-estimated or mis-understood
  4. Develop a Good Contract

    • Provide incentives to improve operations and productivity
    • Both parties must share benefits
    • Detail obligations, expectations and remedies
  5. Standard Operating Procedures

    • Operating manuals for procedures and policies are essential
    • Develop the manual together
  6. Identify and avoid friction points

    • Try and identify in advance
    • Develop procedures for dealing with them
  7. Communicate Effectively

    • Must be frequent and two way
    • Communication is second only to poor planning for the failure of outsourcing relationship
  8. Measure performance and communicate results

    • Identify and agree on Key Performance Indicators (KPIs) before commencement
    • Measure and communicate standards on a regular basis
  9. Motivate and reward providers

    • Reward and recognise good performance
    • Provide compliments and recognition that works
  10. Be a good partner

    • Must be a partnership that is mutually beneficial
    • High level of integrity is essential
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