This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
This Website Uses Cookies
By closing this message or continuing to use our site, you agree to our cookie policy. Learn More
This website requires certain cookies to work and uses other cookies to help you have the best experience. By visiting this website, certain cookies have already been set, which you may delete and block. By closing this message or continuing to use our site, you agree to the use of cookies. Visit our updated privacy and cookie policy to learn more.
Food Engineering logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Food Engineering logo
  • Home
  • Magazine
    • Current Issue
    • Digital Edition
    • Archives
  • Exclusives
    • Fabulous Food Plants
    • Plant Construction Survey
    • Plant of the Year
    • Sustainable Plant of the Year
    • State of Food Manufacturing
    • Top 100 Food & Beverage Companies
    • Web Exclusives
  • Topics
    • Latest Headlines
    • Automation
    • Cannabis
    • Case Studies/Field Reports
    • Columns
    • Dry Processing
    • Food Safety
    • Innovation
    • Packaging
    • Processing
    • Sustainability
    • Tech Update
  • News
    • Manufacturing News
    • New Products
    • People & Industry News
    • Plant Openings
    • Recalls
    • Regulatory Watch
  • Food Master
  • Resources
    • Classified Ads
    • Custom Content & Marketing Services
    • FE Store
    • Government Links
    • Industry Associations
    • Market Research
    • White Papers
    • Tech Flash E-newsletter
  • Events
    • Calendar
    • Food Automation & Manufacturing Conference & Expo
  • Multimedia
    • Interactive Spotlights
    • Videos
    • Photo Galleries
    • Podcasts
    • eBooks
    • Food Plant of the Future
    • Webinars
    • Food Engineering's Youtube
  • Contact
    • Contact Us
    • Advertise
  • Subscribe
Home » Outsourcing requires homework
Manufacturing News

Outsourcing requires homework

April 1, 2008
Reprints
No Comments


Whether a processor outsources procurement, manufacturing, product innovation, IT services or business processes, there’s no doubt that, if executed properly, outsourcing can save money and take the pressure off several business tasks. But many companies don’t do homework first, according to a Deloitte Consulting 2008 outsourcing report entitled “Why Settle for Less?” Deloitte surveyed a group of 300 executives directly involved with outsourcing services worldwide and found some surprising results.
83% of all respondents reported their projects met their ROI goals of slightly above 25%. A majority (70%) were satisfied or very satisfied with their outsourcing arrangements. However, 39% reported they had terminated at least one outsourcing contract and transferred it to a different vendor. Of those who were dissatisfied or very dissatisfied with their largest contract, 50% had brought the function back in house, and 61% reported they had escalated problems to senior management in the contract’s first year.  While most executives reported outsourcing was working financially, their relationships were not without problems.
Of the 70% majority, only 34% of the executives felt they gained important benefits from innovative ideas or transformation of their operations. Thirty-five percent of executives, including 55% of executives who were not very satisfied, wished their companies had spent more time on vendor evaluation and selection. If they could start over again, 49% of the executives surveyed said they would define service goals that aligned better with their companies’ business goals. The dissatisfied respondents saw underestimated scope, higher-than-expected costs and poor quality communications, service and reporting from their service providers.
The survey also included 31 service provider executives, who by a 3-to-1 margin felt their client companies were not prepared for outsourcing, didn’t have a solid plan, didn’t have the operational data to make sound outsourcing decisions and/or didn’t understand how the to-be organization would really work.
The report emphasizes that executives should consider cost reduction as a “given,” rather than a primary driver in outsourcing, and look at innovation and transformation as real benefits. But attempting to fix a dysfunctional operation through poor planning and lack of due diligence will result in failure. As the report says, “outsourcing initiatives succeed by design, not luck.”

subscribe to Food Engineering

Related Articles

REGULATORY WATCH: COOL plain English required

FDA finalizes new egg requirements

Intelligent Cuisine Requires Smarter Integration

FDA urged to require testing methods for biotech crops

You must login or register in order to post a comment.

Report Abusive Comment

Subscribe For Free!
  • Print & Digital Edition Subscriptions
  • eNewsletter
  • Online Registration
  • Subscription Customer Service

More Videos

Popular Stories

North Carolina Food Innovation Lab

North Carolina Food Innovation Lab takes aim at food production of the future

BKON's RAIN technology

RAIN uses vacuum cycles for extraction to occur at the deepest layers of coffee

Prestage Farms pork processing facility

How Prestage Foods of Iowa built a state-of-the-art pork processing plant

water sustainability

Reduce, reuse, recycle can help processors meet water usage goals

date labels

Much food waste comes from misinterpretation on product date labels

Food Master 2020

Events

April 26, 2020

Food Automation & Manufacturing Conference and Expo

FA&M logoFood Engineering's Food Automation & Manufacturing Conference and Expo (FA&M) is a 2 ½ day event that brings food and beverage processors and suppliers together to gain valuable information on the latest trends and technologies in manufacturing, automation, sustainability and food safety.

January 1, 2030

Webinar Sponsorship Information

For webinar sponsorship information, visit www.bnpevents.com/webinars or email webinars@bnpmedia.com.

View All Submit An Event

Poll

Severe Weather and the Supply Chain

How will this year’s severe spring weather affect your supply chain?
View Results Poll Archive

Products

Packaging Research in Food Product Design and Development

Packaging Research in Food Product Design and Development

Packaging Research in Food Product Design and Development is the first book to comprehensively address the issues of graphics design and visual concepts, from a systematic, scientific viewpoint, yet with business applications in mind.

See More Products

2019 Top 100 Food & Beverage Companies

Food Engineering

FE December 2019 cover

2019 December

In the December 2019 issue of Food Engineering, we take a behind-the-scenes look at Prestage Farms' new pork processing plant in northwest Iowa.
View More Create Account
  • Resources
    • Food & Beverage Brands
    • List Rental
    • Survey And Sample
  • Want More
    • Connect
  • Subscribe
  • Privacy Policy

Copyright ©2019. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing