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Step by step thesis cheap write for me impact of technology on business research paper examples of summary strong response essays following program is quartered at the aarc annual industry forum in orlando florida i'm pleased to welcome editor-in-chief of supply chain brain Russell good joining us for conversation today on vested outsourcing is Kate fantastic on the faculty of the center for executive education at the University of Tennessee Kate welcome Thank You Russell Kate you've just published a book and I just want to make sure I get the title correct it's vested outsourcing five rules that will transform outsourcing now what prompted you to write this book well Russell I've had the unique opportunity to look at outsourcing from four different angles first working for microsoft designing and developing outsource solutions with their third party logistics providers and other service providers that they had second being on the service provider side I work for a billion dollar service provider then in 2002 I started my own consulting company where we actually helped companies define metrics creates supplier dashboards and look at performance management with their suppliers and lastly four years ago the University of Tennessee asked me to lead a research project around outsourcing the Air Force had given the University of Tennessee a 35 million dollar contract to study various outsourcing problems and issues and one of those issues was trying to find a better way for to outsource services now in your book I understand that you highlight the 10 most common outsourcing problems share with us if you will what are the two that you see most frequently well number one would be the zero-sum game in most outsourcing relationships we sit across the table from partner instead of sitting on the same side of the table solving a problem at the end of the day businesses are in the business to make money and if we put that at the heart of what we're trying to do we can really come up with some solutions driving out non-value-added waste and inefficiencies out of the process that will fund both of us to achieve our goals the company to reduce their costs and improve their service and the service provider to improve their margins these seconds is what i call the activity trap and the activity trap is where we outsource based on transactions instead of results and so the company or the service provider gets paid every time they do an activity a cash register ring for every pallets the store and every product that's counted every units it's shipped and it really creates a perverse incentive where I as a service provider don't have a vested interest to actually reduce the inefficiencies because i'm getting paid on those transactions so we need to flip that to a results-oriented or an outcome-based oriented approach now you have five rules that address the ailments that you just described what are these 5 rules and how do they address the problems well rule number one gets to the heart of that activity trap and that is having an outcome-based versus a transaction based business model we want to be able to incentivize create a business model where the service provider is incentive to actually reduce the number of activities and achieve our results instead of being paid for an activity we want to pay them for our results rule number two is focus on the what and not the hell right I call this the outsourcing paradox we outsource to the experts yet we tell them exactly how to do everything and our detailed statement of works so we really need to get away from that how mentality into the what and our service providers are smart and they can solve for those problems rule number three is to create a clearly defined and measurable outcomes if we're going to shift to this outcome-based model we better know exactly how we define success and how we're going to measure success because our payment structures are going to be based on that which leads to rule number four having a pricing model that is uses incentives to help us solve for those costs service trade-offs many companies approach business as trade-offs you can reduce your costs but it may come at the expense of service or service provider bring our costs down and it comes at the expense of margin the real companies who are very good at what they do the experts will actually solve for those trade-offs and achieve what we call trade ups but we need to have a pricing model that will allow for that and lastly rule number five is to create a governance structure that allows us to have insights versus oversight all too often we find that companies are micromanaging their suppliers and instead what we need to do is use our data and our information to bring insights into that relationship okay it occurs to me that some viewers familiar with outsourcing may say but wait a minute vested outsourcing sounds to me like performance-based outsourcing are they the same thing or is there a difference well good question and my answer is it depends if you define performance-based outsourcing the way I define it it is the same the problem is the term performance-based outsourcing usually gives a connotation that it's okay if we just take our existing contract slap on some metrics and tie a bonus to it and voila we have a performance-based deal in reality that is not a performance-based deal and that's why I really like the word vested outsourcing when the publisher came to us and asked us to write a book about our research they brought this to our attention that the term performance-based outsourcing really didn't give the right connotation of what it meant to have a good deal structure and that's why we like vested outsourcing because it really a vested deal a company or a service provider who isn't working in your vest it doesn't have a vested interest in your performance really isn't a relationship worth having at all are you confident that 3pls and customers are ready for vested outsourcing i think the the enlightened ones are but not everybody's enlightens and when I use the term enlightened what I mean is you've realized that the same way you've been doing outsourcing is delivering the same results and that now it's time for a change walk us through what challenges you see though to implementing the rules that you've been talking about well since this is a different approach it's a paradigm shift and we are doing things differently having the mental fortitude to go at and almost jump off with a leap of faith that playing by the rules playing with a what's in it for we philosophy as I like to say is really good for you and most of the time businesses and individuals have gone to business schools learning how to win at the expense of others and we need to get away from that mentality and companies who really are enlightens have come to the conclusion that when I win at the expense of my service provider or vice versa it's really not in my economic best interest we really need to play together to have a good long-term solution and relationship I suppose it's fair to say that every good book deserves a sequel so what areas are you researching related to vested outsourcing that might provide fodder for a sequel well we actually are working on a sequel as we speak the first book really told about the process and the rules and the second book is going to profile on three companies who will tell their story about how they've transformed their outsourcing philosophies and relationships to have a vested solution with their providers okay did it has been an absolute pleasure speaking with you today thanks for being with us Thank You Russell Kate fantastic university of tennessee speaking with us today about vested outsourcing thanks for watching you write for me cfp capstone alternative program Webb Institute, Glen Cove.