Chris Oleksy06.12.06
Outsource Partnership “Touch Points”
By Chris Oleksy
Chris Oleksy |
The bottom line is that we are born to be partners within the environment in which we live.
Since partnering is so important to human existence, it is critical that it be managed correctly and not avoided. Examples are numerous for areas in which lack of partnering occurs, whether it is in a business setting or not. For instance, why is it often so hard to share the roadway when driving to work (since many people seem to believe they own two of three lanes)? Why is it so hard to share your time when you can’t find any to begin with?
Many case studies tell us that partnering can be difficult because it can result in the mismatch of expectations. In other words, if sharing is an equal portion, and someone takes an unequal portion, expectations are mismatched and frustration or failure results.
Although we can all cite examples of where partnerships struggle, more examples of successful partnerships dominate. Examples include the Chicago Bulls’ basketball dominance in the 1990s—a time when teammates partnered for years—to those partnerships we see daily in business. Partnerships are key to everything we do.
Within the world of outsourcing, partnering/sharing or expectation matching is key to a successful partnership. If expectations are matched, and sharing occurs, the partnership can accomplish almost anything. If this does not occur, trouble can doom the best intentions!
To set the stage, in Figure 1, Alpha Company is a manufacturing company that stamps metals, brings in other raw materials from outside the company, assembles them into a device and sends those devices to a customer. Figure 1 is an adaptation of the Supply Chain Council’s Supply Chain Operations Reference Model, called SCOR, which has been utilized in previous columns. In this example, a vertically integrated environment exists where metal stampings are done in house, then assembled with other raw materials (not shown), then shipped to the customer. The dotted line signifies the “touch point” between Alpha company and its customer. (Note: Keep the term “touch point” close to mind.)
Figure 2 shows an environment where the metal stamping has now been outsourced to a supplier. Notice the presence of two dotted lines now—one between Alpha Company and its customer and a new one between Alpha and its new supplier. These signify very important, but different, “touch points.”
The concept of touch point partner management is very important because this is where critical expectation alignment is established and managed to create a successful partnership. Ignoring the concept of touch points will result in certain failure. As an example, companies such as Alpha often seem to forget that they outsourced the metal stampings, treat business as usual and do not put into place business processes for touch points (eg, business reviews, steering committees, metrics, team building, etc.).
If the touch point between Alpha Company and its customers is not managed correctly, Alpha Company will not be in business very long. Likewise, if the touch point between Alpha and its supplier isn’t created with a win-win philosophy in mind, or “share” in mind, the relationship will ultimately fail and, even worse, the business model may fail. It makes no difference where you fit within the supply chain—“chain of chains”—you must manage the touch points both upstream and downstream to have a successful business and partnership environment.
Many Customer Relationship Manage-ment (CRM) models are available within the industry to help Alpha focus on its customer. What aren’t prevalent are the models demonstrating how to create downstream partnerships with suppliers. This is why many companies miss the enormous benefits of outsourcing—because they do not take the time to create a mechanism for touch point partnerships. In other words, they miss the benefit of “two heads being better than one” logic in the battle of business! These companies miss the benefit of having the “right” person (organization), doing the “right” thing, within the “right” place, at the “right” time!
More times than not in business, the companies that figure this out are the winners in their sector. Look at companies such as Wal-Mart, Best Buy, Target, Dell and many others whose business models place enormous reliance on supplier partnerships. Imagine if they attempted to manufacture everything they sell. Within the medical device industry, the list of companies that have mastered partnerships is growing every day as OEM manufacturers realize that they must outsource—and do it well—to keep up with the changing environment of healthcare and the need to invent new technologies while taking costs out.
The goal of this column is to set the stage for the concept of touch points and the importance of expectation and alignment management in partnerships.
In conclusion, does your company have models to effectively manage touch points? When partnerships with suppliers or customers have gone well, isn’t it because the touch point process was set up and managed well? When they failed, wasn’t it because the touch points were not managed the way they should have been?
Does your company take the time to figure out how to make partnerships work? Don’t miss out on the power of outsourcing, simply because your company has yet to figure out touch point management. After all, would we have the many cures for cancer or the many vaccinations we have today if medical scientists didn’t attempt to “figure it out”? Would the Chicago Bulls have won multiple championships if they had not figured out how to partner and play like a team?
Partnerships require an investment in touch point management. What would you do differently in your organization in regards to touch point management? Go do it!