Purchasing selects suppliers based on trust
By Staff -- Purchasing, 3/26/1998
Thinking of outsourcing some or all of the office buy? Purchasing departments that currently manage outsourcing agreements for mail and copy-center services view suppliers as partners and consider the strategy essential to their companies' overall business success.That's a finding of a new survey of outsourcing decision-makers at 330 large and mid-size Dun & Bradstreet U.S. companies, conducted by Louis Harris & Associates for Pitney Bowes Management Services.
Survey results show outsourcing is essential for business efficiency and is on the rise. Among the execs polled, all of whom outsource copy and mail-center services and are familiar with suppliers of these services, 58% say the strategy is absolutely essential or very important.
Thirty-eight percent of respondents report that at least 11% of their total operations are currently being outsourced.
In determining success of the agreements with outsourcing suppliers, respondents consistently rank service criteria higher than price. For instance, accurate billing is "absolutely essential" or "very important" to 89% of respondents. Other criteria used to evaluate an outsourcing relationship include employee quality (88%), faster service response (86%), and lower overall costs (79%).
Satisfied with performance of outsourcing suppliers, more than four-in-five respondents say they would not consider bringing outsourced functions back in-house.
Respondents, in fact, seem more likely to consider increasing use of outsourcing suppliers. According to survey results, level of outsourcing is rising or remaining constant at 93% of respondents' companies; 4% say use of the practice is declining.
Among the functions respondents seem likely to outsource in the future are records management (21%) and file management (17%). Imaging, benefits management, telecommunications, copying/document management, MIS, and warehouse management are other areas respondents would outsource.
Selecting a supplier
Ranking performance of current outsourcing suppliers on a scale of one to five, respondents are most satisfied with performance in these areas: tax planning and compliance, 4.4; legal services, 4.3; imaging, 4.1; payroll, 4.1; records management, 4.1; copying document management, 4.0; mail services, 4.0; and supplies ordering, 4.0.
Respondents selected these suppliers based on trust and responsiveness, criteria they say are most essential to them. Efficiency, expertise, and total cost, consistency, and technology/innovation are also important.
Poor service is the overriding reason companies would change outsourcing suppliers. In fact, 90% say poor service response would necessitate reconsideration at the end of an agreement.
Reasons for outsourcing
* Specialized/core competency issues
* Cost/don't have to pay benefits
* Gain or maintain control function and to geographic location
* Technology changes too fast
* Learn best practices or improve skill
* Lots of complaints (quality, expertise)
* Substitute operating expense for capital investment
* Shift risk and liability
* Move functions offsite to free space or improve access
* Great supplier presented itself
* Disencumber the company as precursor to geographic location
* Competition does it this way
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