Managing Automation - December 2007 - (Page 34) [ SPECIAL REPORT ] checklist manufactured what it was contracted to make. However, when the components come together, they don’t work as required. As the Boeing and Mercedes examples illustrate, a tremendous amount of an outsource contract’s value depends on how the outsourcing relationship is managed. To build what Janeeva’s Gupta calls “loosely coupled” organizations like the one Boeing uses, Gupta’s company has begun to focus on ORM software designed to extend the manufacturing enterprise (see chart, at left). “It turns out that outsourced manufacturing operations have the same management challenges as financial services firms, in terms of getting real-time visibility into their operations in a way that’s easy IMPROVING VISIBILITY to tie into any technology To build outsourcing relationship management in an open infrastructure anywhere in environment, tools must: the world,” Gupta says. • Integrate with existing MRP/ERP, PLM, and supply chain “Outsourcing relationenvironments. ship management is the • Handle, validate, and normalize large volumes of data new class of technology from multiple sources. that directly and uniquely • Define and track complex metrics, and then generate addresses outsourcing isdashboards and reports. sues faced by manufactur• Formally manage, track, and resolve issues, and support ers,” Gupta says, referring collaboration and ongoing communication. to a category of software of Source: Janeeva his own invention. “There are point-solution technology subsets of ORM, such as SLA management, issue management, and collaborative document management tools. As customer awareness increases and technology providers more directly address requirements, manufacturers can expect that robust ORM tools will be accepted — or maybe managingautomation.com even taken for granted, as CRM is today — as part of the corporate inRELATED ARTICLES: frastructure.” Inside an Outsourcing Giant According to Vantage Partners’ Erwww.managingautomation.com/outsourcing tel, ORM tools like the ones Gupta Boeing’s Big Supply Chain Wager describes provide manufacturers with www.managingautomation.com/boeing a variety of benefits, including the E2open: Supply Chain Management following. The tools: AVOIDING THE MULTI-TIERED SURPRISE • Allow organizations to make betwww.managingautomation.com/e2open1 ter choices about when and where to Creating the One Enterprise “dial up” or “dial down” the activiwww.managingautomation.com/integrate ties they are outsourcing. • Allow greater transparency for COMPANIES MENTIONED: internal stakeholders, and between Cisco Systems buyer and provider, around the facwww.managingautomation.com/cisco2 tors that tend to cause problems — Janeeva recurring issues, lingering requests www.managingautomation.com/janeeva for new services, and performance Rockwell Automation problems and their root causes. By www.managingautomation.com/rockwell3 allowing these issues to be identi- maonline fied early, they become easier to discuss and address effectively. • Allow for greater discipline and auditability. When a manufacturer specifies what is to be measured, when it is to be reported on, and who needs to be part of the approval and review processes, the company has much clearer expectations and much cleaner interactions between buyer and provider. • Allow for the collection of data in a structured tool instead of using e-mail and spreadsheets. This approach also allows for process improvements. For example, analyzing the frequency and types of issues raised leads to opportunities for process improvement; recognizing patterns in change orders can suggest when a contract amendment will produce savings; and sharing trends in performance problems or in the health of the relationship facilitates better dialogue. The best tools integrate all of these functions, so that, over time, the organization can develop even more useful insights and improve processes by looking at cause and effect, outcomes that fall between performance levels, issue resolution, the health of the relationship, and the financial impact of changing consumption levels. “Doing all these things across multiple providers without some automation would be very time-consuming, if not impossible,” Ertel says. “Doing all these things with tools that outsourcing customers can buy ‘as a service’ without a lengthy implementation process allows them to leverage automation best practices — always using the latest and greatest versions of the tools — and focus their time and energy on using the tools to manage the service provider.” Many companies are not realizing the benefits they had expected from their outsourcing operations, Gupta says. “Some are mistakenly looking for the solution in renegotiating vendor contracts, changing providers, or giving up altogether.” However, manufacturers are increasingly realizing that technology solutions are available that will address their unique challenges. “Ideally, this progression will continue and companies will no longer be taking the tactical, ‘I’ve got a headache’ approach; rather, they will treat the technology as strategic, much the way that the adoption cycle has happened in the other SaaS sectors,” he says. There are emerging best practices and an emerging corps of professional outsourcing managers. “There is also growing awareness among top executives that they can, and should, embrace the extended enterprise strategy and succeed,” Gupta says. ■ ma December 34 2007 http://managingautomation.com http://www.managingautomation.com/outsourcing http://www.managingautomation.com/boeing http://www.managingautomation.com/e2open1 http://www.managingautomation.com/integrate http://www.managingautomation.com/cisco2 http://www.managingautomation.com/janeeva http://www.managingautomation.com/rockwell3
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