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Warehousing Management is part of a logistics management business process, which is itself is a facet of supply chain management. The general perception of the Warehouse is simply a place to store finished goods; semi-finished goods and raw material, inbound functions that prepare items for storage and feed manufacturing line and outbound functions that consolidate, pack and ship orders in order to provide important economic and service benefits to both the business and its customers. In my opinion Warehouse Management (WM) is not given required attention with the advent of Supply Chain.   Warehouse Management is considered as back-end job.  In my opinion, the WM is fundamental to supply chain success.  The flow of material is very critical to supply chain and the flow is seamlessly managed by the Warehouse.  WM is a science and an inefficient Warehouse or a process could cause disasters to the business.  This is a rudimentary attempt to familiarise the WH functions and its intricacies.  Hope you enjoy the same and I sincerely appreciate your feedback.

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Warehouse, Green Logistics Co., Kotka, Finland

Image via Wikipedia

Warehouse Management is a routine boring activity for some.  Same old, pick, pack and ship.  However, things are changing we are seeing lot of technology introduced in the Warehouse to make it more productive, efficient and happy place to work.

As we all know technology comes with a cost and also ushers in efficiency levels.  Warehouse Management is always fascinating subject for me; it provides lot of challenges and job satisfaction because of measurable performance.  Incidentally, I am responsible for 4 Distribution Centers managed by able professionals.  The common problem we face is known as miss-shipment (short, excess or wrong product dispatched).  We all know that only technology will help us to avoid such mishaps.  As you know miss-shipment results in disruption to operations, distribution costs go up and we end up with unhappy customers with inventory inconsistencies.

Initially, this problem was addressed by bar coding.  But what is bar coding?  Common, we all know about it.  However, here is the explanation.  “A barcode is an optical machine-readable representation of data, which shows data about the object to which it attaches.”   Beyond bar coding we are in era of RFID (Radio Frequency Identification). “RFID tags, a technology once limited to tracking cattle, are tracking consumer products worldwide. Many manufacturers use the tags to track the location of each product they make from the time it’s made until it’s pulled off the shelf and tossed in a shopping cart.”

We took one step forward and introduced something called ASRS (automatic storage and retrieval system) to eliminate miss-shipments.   An Automated Storage and Retrieval System (AS/RS) is a combination of equipment and controls that handle; store and retrieve materials as needed with precision, accuracy and speed under a defined degree of automation.

I bumped into a interesting video in the areas of warehouse automation, thanks to my colleague Shaun.  Watching these videos and hoping that I could implement a warehouse with such a precision is no more fantasy.  It is only matter of time.

I thought I should reach out to larger audience through my blog.  Automation at its best and making warehousing function highly technical and very attractive, gone are those days when warehouse was known as dark, dusty and rundown place.

Enjoy the video!

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Some time ago, we have reviewed the Warehouse KPIs and it time now to review the best-of-breed performance in order to bench mark the warehouse performance.  The data source is from DC Measure 2010, by Karl B. Manrodt, PhD and Kate L. Vitasek, published by WERC 2010.

The respondents were drawn from large corporations, medium size organizations and small industries.  The classification was based on company’s turnover.  The first group (31.9%) turnover is over 1 Billion US $, the second group (30%) consists of companies with turnover between 100 Million and 1 Billion US $ and the third group (38.15%) consists of companies below 100 Million US $.  In my opinion the grouping is balanced.

Some of the vital Key Measures:

If we review the top 10 metrics used by the companies (listed below) one can clearly understand how the focus has shifted to warehouse activities in order to improve overall supply chain efficiency.  All the below mentioned top 10 supply chain measures used by the survey participants are pointing towards operational efficiency.  It is a foregone conclusion that if we improve the efficiency/ productivity / cycle time, the overall operations cost would become efficient.

I have been monitoring the key measures for the last five years and I will highlight the improvement or decline in the performance level.  For the purpose of this article, I would be focussing on best-in-class performance, median performance, and the worst performance.  The logic is to understand the best performance and facilitate benchmarking.  The median performance will act as guidance for companies who cannot perform at the best-in-class rate and would continue to focus on improvement using median performance as a guide.  The worst performance is again used as an indicator for recognizing unacceptable performance.

I have divided the measures into five categories based on the nature and characteristics of the activity, the first one focuses on operations management, the second one deals with Inventory Management, the third one concentrates on Order Management, the forth one aims at Cost Management efficiencies, and the fifth one highlights Resources Management efficiency.

Operations Management:

I have included receiving, put-away, pick-n-pack and shipping activities.  In my opinion, Damage free receipts, Order pick accuracy, Cases and Pallets picking rate, complete order shipment and Damage free shipments indicate the operations management efficiency.

Please click the above graphic to magnify the image.

When we compare with 2009 best-in-class performance; dock-to-stock cycle time (23.33%) and cases picked and shipped per hour (12.11%) registered improvement in performance.  We have seen negligible efficiency improvement in handling material without damages.  We have seen decreased productivity levels in orders and pallets picked in an hour.

Inventory Management:

Inventory efficiency is the key indicator for Supply Chain efficiency, Inventory Shrinkage, Inventory in days of supply and Raw material and finished goods inventory on hand in days are considered as critical measures.  It is necessary to understand the difference between Inventory in days of supply and raw material and finished goods inventory on hand in days. Inventory in days of supply is calculated as shown below:

= Current (at the end of year/period) inventory value/ Total value of cost of goods sold.

Inventory in days of supply (13.64%) and Raw material in days (12.5%) shown improvement in 2010 compared 2009 results and this could be considered as tight inventory management as focus is to reduce inventory in the supply pipe.  We have seen 12.86% additional finished a goods carrying which is not in line with above two inventory performance indicators, this could also indicate lacklustre demand patterns noticed in the retail industry which could have caused additional inventory carrying.  Considerable (60%) improvement was noticed in case of product damages in the median group.

Order and Cost Management:

Order fill rate, Lost Sales, Distribution cost to sales are the key performance indicators in this segment.

Lost sales % and back order % has shown tremendous improvement in the best-in-class group.  This is an indication of supply efficiency.  As we all know both these performance indicators are interlinked.  The distribution cost has gone up by 20%, which could be due to low sales volume in $ and fixed warehouse costs.  Whereas the distribution cost per unit shipped has improved by up 94%, this is an indication of increase in number of units shipped but the sales value decreased; this could mean increased product discounts.  There was no increase in distribution cost in median group.  However, in-line with best-in-class results, we could notice improvement in cost of units shipped indicating increase in volume of units shipped.

Resources Management:

This is my favorite segment.  I strongly believe that time related positioning of resources is logistics management and logistics is part of supply chain.  Any improvement in this segment, I believe will have a direct impact on supply chain efficiency.  Warehouse Capacity utilization is an indication of business efficiency.  Equipment utilization and Human Resources turnover indicates how well warehouse operations are managed.  Last but not least workforce productivity is the proof of happy workforce.  In my opinion, happy workforce will contribute high productivity.  In order to achieve this both workers and management are equally responsible.  I am sure by this time you would have understood why this segment is my favourite.

Honey Comb %: Actual cube utilization/Total warehouse cube positions available.

All in all we have seen improvement in all performance measures.  There is a slight (3.16%) dip in the workforce productivity.  However, HR turnover has shown some great improvement. These two measures analysed together reflect the impact of financial recession.  We have seen salary cuts and uncertain job market.  I believe these two factors could have influenced these performance indicators.  However, we could see improvement in case of productivity levels in median group to an extent of 2.35%.  Any improvement in productivity irrespective of the quantum is always welcome and it is a good sign.

I would like to emphasize once again that warehouse operation is the key to the success of any supply chain.  Unless product moves seamlessly within supply chain, no supply chain would be successful.  This is a great job by the authors; I look forward to reviewing 2011 performance.

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Goals Computer Keys Showing Objectives Hope And Future

The performance indicator or key performance indicator (KPI) is a measure of performance of the business in order to benchmark against the competition and explore the possibility to improve in order to gain competitive advantage.  Warehousing function is a very critical within any supply chain.  If the products do not move seamlessly within supply chain business would face serious service-related challenges.  Hence, it is necessary to drive the performance of the warehouse through key performance indicators.  Further, in a continuous improvement environment, it is essential to benchmark against the industry standards in order to drive improvements.

What is Benchmarking?

“Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries.” Benchmarking is essentially a process to measure a business’s processes against the competition, world standards or the business itself.

How do we benchmark and why?

The benchmark scope typically includes productivity, quality, time, and cost. The objective of this activity is to improve from learning the performance measurement in order to execute things better, faster, and cheaper.  The benchmarking effort is driven by a desire to evaluate business processes to see if they may be improved. The resulting improvements should then be related to how those improvements may be implemented to help a company better meet the requirements of its customers.

Operating cost break-up in a typical warehouse:

As you can see from the below-given pie chart (source: a recent survey of warehousing professionals) that the order picking is the most expensive operation and it is directly linked to customer satisfaction.  Any wrong pick would lead to an unhappy customer.  In order to drive improvements, it is very important to identify the cost distribution and identify improvement areas.  Generally, the improvement activities are identified based on cost or productivity linked activities.  The order pick activity is both highly labour intensive and 50% of warehouse costs were spent on this activity.

How to determine KPIs?

People, Cost, Space and Systems drive the performance inside the warehouse.  Hence, generally, warehouse KPIS are based on the above-mentioned drivers and focused on activity in order micromanage the performance.  The following activities are common in any warehouse:

  1. Receiving;
  2. Put-away;
  3. Storage;
  4. Pick-n-Pack;
  5. Shipping

Receiving:

The receiving activity is fundamental to warehousing function. Unless the merchandise is properly received, it will be very difficult to handle all other subsequent functions. The receiving function allows warehouse operators to receive product against a purchase order, and against an Advanced Shipping Notice (ASN) that has been received via Electronic Data Interchange (EDI). Receiving process could include goods physically received at the warehouse and stored or directly delivered at the customer site or cross-docked.

The relevant KPIs for receiving function should include the following:

  1. Cost – Cost of Receiving per receiving line;
  2. Productivity – Volume received per man-hour;
  3. Utilization – Receiving Dock door utilization %;
  4. Quality – Accurate receipts %;
  5. Cycle Time – Time taken to process a receipt.

Put-away:

Once receiving activity is completed, the accepted merchandise has to be stored in a location that is convenient to retrieve for further action.  This process is called put-away and this is the just reverse of order pick function.  We have different types of put-away processes.

  • Direct Put-away – Put-away directly to primary or serve locations.
  • Directed Put-away – Put-away directed by Warehouse Management System.
  • Batched and sequenced Put-away – Received material sorted and put-away processed in batches to maximise the efficiency.
  • Interleaving – Combine put-away and retrieval to avoid empty travel.

The KPIs for this activity should include the following:

  1. Cost – Cost per put-away line;
  2. Productivity – Put-away per man-hour;
  3. Utilisation – Utilisation % of labour and equipment;
  4. Quality – Perfect put-away %;
  5. Cycle Time – Time taken for each put-away.

Storage:

Broadly we have two types of storage systems and they are manual storage and the second one is automated storage and retrieval system (AS/RS).  Again within manual storage, we have six different types of storage and they are:

  1. Block stacking – “Units loads stacked on top of each other and stored on the floor on the storage lanes.”
  2. Stacking frames – “are either frames attached to standard wooden pallets or self-contained units made up of decks and posts.  Stacking frames are portable and enable users to stack material several loads high.”
  3. Single-deep selective pallet rack – “is a simple construction of metal uprights and cross-members providing immediate (pick-face) access to each load stored (that is, no honey combing).”
  4. Double-deep rack – “are mostly selective racks that are two pallets position deep.”
  5. Drive-in rack – “extend the reduction of aisle space begun with double-deep rack by providing storage lanes from five to ten load deep and three to five loads high.”
  6. Drive-thru rack – “is merely drive-in rack that is accessible from both sides of the rack.”

The KPIS for this activity would include:

  1. Cost – Storage cost per item;
  2. Productivity – Inventory per sq. foot;
  3. Utilization – % Location and cube occupied;
  4. Quality – % Location without inventory discrepancies;
  5. Cycle Time – Inventory days on hand.

Pick-n-Pack:

This activity again can be broadly divided into two parts.  First one deal with case picking and the second one deal with small item picking.  Further case picking can be classified into three categories.  The first one is known as Pick-face palletizing where warehouse operator palletizes at the pick-face as he/she traverses the picking tour.  The second one is downstream palletizing where cases are picked onto conveyors and sorted at the staging area.  The third one is direct loading where the cases were conveyed directly into the truck.

Further, the small item picking can be classified into three categories.  The first one is known as picker-to-stock, where the picker moves around to pick the cases.  The second one is stock-to-picker.  In this case stock was sent to the stationed picker through AS/RS machine. The third one is known as automated item picking.  In this process items are automatically dispensed into shipping cartons or tote pans.

The relevant KPIs for this activity would include:

  1. Cost – Cost of picking per order line;
  2. Productivity – Order lines picked per hour;
  3. Utilization – Picking labour and equipment utilization %;
  4. Quality –  Perfect picking lines %;
  5. Cycle Time – Order Pick cycle time per order.

Shipping:

Shipping is the last step in warehouse activity in handling shipping goods to the customer or handling stock transfers.  This process is the origin to moving product from point A to point B.

The KPIs for this activity could include:

  1. Cost – Cost of shipping per order;
  2. Productivity – Order process for shipping per man hour;
  3. Utilization – Utilization of shipping docks in %;
  4. Quality –  Perfect shipping %;
  5. Cycle Time – Shipping time (from the time order picked to physically movement of the truck) per order.

“Continuous improvement is better than delayed perfection.” Mark Twain

The above are the broad KPIs identified for each activity inside the warehouse.  Warehouse operations profile could change based on the product handled.  For instance, in a FMCG/Retail warehouse, the order picking could be manual whereas in the aerospace industry the order picking is totally automated and AS/RS is in operation.  The volume of labour deployed, the cost of operations and capital equipment deployment largely depends upon the product handled in the warehouse.  Hence, the KPIs are to be customised based on product profile.  In my opinion, the warehouse is the most happening place in any business and there is huge potential for improvements in the areas of productivity, cost and avoiding accidents which could result in operational disruption.  Activity based costing would help to monitor warehouse cost behaviour against the budgeted expenditure.  Process mapping and time and motion study will help the business to improve the productivity. The KPIs should be tangible and measurable improvements that can be identified and achieved.  I strongly believe that KPI setting is the stepping stone for performance improvement.

Cartoon Source: http://www.offthemark.com

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Tom Peters, US Management guru once commented, ‘Do what you do best and outsource the rest.’  It is true that one should focus on core capabilities and outsource non-core functions.  But it is not as simple as 123.  In my opinion outsourcing is a strategic decision which could impact the company’s operations and performance.  Hence, care should be taken to answers questions such as why, what, when and how in the areas of outsourcing.  It is very important to understand that outsourcing is not a strategy, but is one of the solutions to achieve the targeted strategy.

“Outsourcing can be defined as turning over all or part of an organizational activity to an outside vendor.” This means trusting an outsider in handling your customers and handing over some of the business controls.  Unless a robust business continuity plan is in place, one cannot venture into such a risk.  Outsourcing may not be a risk.  However, the outsourcing process could be risky unless and until enough care is taken to make the process robust.

Why?

One should find answer to the question, why outsourcing?  “You’ve got to be careful if you don’t know where you’re going because you might not get there”.  It is true, before one embarks on outsourcing supply chain activities, should know clearly why outsourcing is a solution and what would be the expected outcome.  The first step would be to find answers to the question why.  Many would not think for a minute before answering the question.  The very popular answer would be cost savings.  We all know that global financial recession forced businesses to save costs to improve product margins.  Outsourcing is perceived as one of the biggest source of cost savings. If cost savings is the only reason, then outsourcing could be an impulsive decision.  Every organization embarking on outsourcing journey has some unique reasoning behind the decision.  Clifford F.  Lynch suggested that Managers planning outsourcing should seek satisfying answers to the below given four questions.

  1. Is Logistics a core competency of our Firm?
  2. If not, are we exceptionally good at it?
  3. Will Outsourcing add true value to our Logistics Process?
  4. Can we become comfortable with the risk of turning over control and customer relationships to an outside firm?

If the answers to the first two questions are “Yes”, organizations should make a serious attempt to restrain from outsourcing.  However, if the answers to the question three and four are “Yes”, outsourcing could be a viable option.  I am not concluding that one should outsource based on the answers to the above four questions.  In my opinion, it would be a valuable exercise to explore the outsourcing process further by finding answers to the questions such as what, when and how.

Along with these answers, organizations should also find answers to “what if question”, in other words risk mitigation.  There is no guarantee that outsourcing would deliver positive results. Management should have effective contingency plan in place to handle issues arising out of outsourcing failure.

Generally organizations outsource Supply Chain activities to save cost, to reduce capital deployment, to gain global capability, to focus on core functions and maximize customer satisfaction.

What?

What are the activities that could be outsourced is the second vital question to be answered in preparing the strategy for outsourcing.  It is a simple question and at the same time critical to find answers.  It is simple because, some of the Logistics activities are difficult to handle in spite of size and global presence of the organization.  The best example could be transportation (domestic and international).  The efforts involved in transporting goods from point A to point B are phenomenal and it makes a perfect sense to outsource the activity and manage the KPIs. At the same time it is critical to answer this question because Logistics activities include functions which could directly impact the customer and customer satisfaction.  Managers involved in outsourcing should feel comfortable with the thought of handing over customers to the third party and at the same retain the customer satisfaction levels.  The top three reasons given by organizations who do not favour outsourcing are loss of control, confidentiality and security reasons.  Hence, it is very critical to classify the activities into three categories and take appropriate decision based on merits.

In my opinion one can classify activates within supply chain into three categories.  The first level of outsourcing is transactional outsourcing.  This is typically transaction in nature and no long term contracts and no bonding between 3PL and outsourcing company.  This type of outsourcing is driven by cost factor and it is relatively easy decision.

The second classification is Tactical outsourcing.  This kind of outsourcing is on medium to long term basis with negotiated contacts in place and with integrated IT systems, to facilitate free flow of information and create supply chain visibility. The pricing will remain a factor but not prime factor in making outsourcing decision.  This is considered as a stepping stone for strategic alliances which is the third category.

Strategic outsourcing is also known as Strategic Alliance or Collaborative alliance. This type of outsourcing is based on long term relationships with successful outcomes and based on strategic issues.  In this category the 3PL companies become partners in supply chain management and complete transactional transparency will be established.   Very few 3PL companies are able to achieve this status with their customers by constantly innovating and constantly maintaining operational efficiency and integrity. In order to gain this status often 3PL companies offer open book costing method and gain share concepts to demonstrate the transparency and win confidence of the customers.  Below given graphic explains indicative supply chain activity classification.

When?

Timing is very critical in launching outsourcing strategy.  Launching a very critical strategy at a wrong time could lead to disastrous business results.  Every business will have peaks and lows in business operations cycle.  Outsourcing activity should be undertaken during the non-peak time in order to minimize the impact on business and customer satisfaction.  The best way to find answers to this question is to go through the next phase and find answers to the question how.

How?

“Setting a goal is not the main thing.  It is deciding, how you will go about achieving it and staying with that plan”.  I strongly believe that having a plan is great but executing a great plan in critical.  Goals are like milestones, the journey undertaken to achieve those goals is very important.  In implementing an outsourcing plan, project management plays a great role.  Three factors play a vital role in project management and they are, planning, execution and control.

Project Planning:

Planning phase is critical to time related positioning of resources.  The plan should clear describe the scope of the project, deliverables, time-line and cost implications and resources allocation.  A well-documented project plan will make project management lot easier. Many believe that outsourcing is all about handing over activities to the third party.  However, the process of handing over is very important.  If required resources were not allocated for the outsourcing, project, it is deemed to fail.

The success of outsourcing largely depends upon the dedication and commitment shown by the organisation in making the outsourcing a success.  In many cases, organisations disengage from the process, thinking that the project implementation is the responsibility of the 3PL. This is biggest possible reason for the failed relationships. Outsourcing is like a marriage, the success of partnerships with 3PLs requires a combination of trust and collaboration.

Outsourcing is a change management process.  The resistance for the change may come from three sources. The first resistance could be from content (what is changing, i.e., structure, systems, technology); the second possible resistance could be from Process (how the change will be planned, designed and implemented) and the last but not least is the people (those impacted by or participating in the change).  A good project manager should develop a comprehensive plan to counter the resistance.

Inefficient Costing methodology will directly contribute to the downfall of outsourcing.  An efficient costing system will not only help in understanding the costs involved in outsourcing but also will help the organisation in measuring the cost efficiency. Often we hear the question, “Are we making any money doing this?”, or the answer, “I don’t know. We don’t have the costing data.” Collecting cost data relative to a specific functional area is a challenging task. Gathering detail of true Supply Chain Costs is fundamental in assessing outsourcing success.

Clearly, Activity Based Costing (ABC) offers great potential for improved performance and competitive differentiation.  Activity-based Costing enables organisations to enhance profits through cost control and tracking practices. The North American and Western Europe users prefer deal structures which eliminates risk of outsourcing.  However, Asia Pacific users are still following the conventional costing methodology.  An efficient costing system and periodical cost analysis which is translated to performance indicators will help both the parties to keep the project on track.  It has been established time and again that a transparent costing system helps in bonding relationship between the user and the 3PL company.

Project Execution:

Executing the plan plays a critical role in outsourcing.  Some of the factors to be considered during this phase would include, selecting the appropriate service provider, Develop water tight legal documentation, developing a joint project team.  Outsourcing an activity to a third party is based on cost and service compatibility. Some of the critical factors considered in selecting the right partner for outsourcing include, reputation, financial stability, industry experience, asset ownership, IT capability, customer service, feedback from the existing customers, flexibility, commitment to continuous improvement, top management involvement and general reputation as a third party service provider.  A scientific selection process will help in find the fight match.  According to one report published by “EYEFORTRANSPORT” in 2005, the following are the key drivers in choosing a 3PL.

Inept Legal Documentation will also add confusion to the relationship and contribute to the failure.  Even though contracts are administered and managed by humans through structured processes, it is very much necessary to document what is agreed and what is disagreed clearly in order to avoid ambiguity in the relationship.  The legal document (contract) should address all possible friction points and address them with remedies.  In the absence of clarity, confusion prevails and confusion leads to inefficiency and inefficiency leads to downfall. Exit strategies such as mediation and arbitration should also be part of any 3PL contract.

A well-defined project team with roles and responsibilities clearly defined will help the outsourcing process a success.  The project team should be supported by the top management from both the sides.  The initial phase of the execution is very critical and people get bogged down by issues during this phase, it is the leadership team that should save the project from the initial hiccups and take it to the next level.

Project Control:

“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” – H. James Harrington

Competence is critical to profitability, it is of little value unless it accompanies by quality effectiveness. While competence defines the economical use of resources, Effectiveness reflects how well a process achieves its business objectives. Hence, it is very much necessary to identify “Qualitative Measures” which focuses on effectiveness and “Quantitative Measures” which focuses resource efficient utilisation. This is a very critical exercise and while defining the measures, it is very much necessary to follow a practical approach and based on current performance standards and taking into account the targeted objectives.  Ambiguous and ambitious performance targets will ruin the whole objective of outsourcing.

One of the most critical tasks during the planning phase is developing performance measurements and reporting methods. The outsourcing organisation must take initiative to design measures that support the company’s business goals for the outsourcing strategy. Absence of efficient Performance Measurement system will also directly contribute to the downfall of outsourcing initiatives. The five studies published by the Council of Logistics Management on the subject of performance measurement in logistics had three significant findings in common. 1. Most firms do not comprehensively measure logistics performance, 2. Even the best performing firms fail to realize their productivity and service potential available from logistics performance measurement, and 3. Logistics competency will increasingly be viewed as a competitive differentiator and a key strategic resource for the firm.

Hence, it is essential to measure the project performance periodically as documented in planning process and share the outcomes with the team.  This helps in understanding limitations if any and also helps in improving the performance through further innovation in the business processes.  The ultimate goal of outsourcing is to continuously improve the performance in order assure smile on the face of the ultimate customer.

Sincere advice may offend the ear but is beneficial to one’s conduct. – Chinese Proverb.  The success of outsourcing largely depends upon collaborative approach adopted by outsourcing company and the service provider.  Collaboration is possible only when there is a trust in partnership.  Where trust is the foundation for the relation, where is the question of betrayal and failure?  In order to summarize, I would strongly recommend the following steps to make supply chain outsourcing a success.

  1. Develop a Strategy and obtain approval from all stake holders;
  2. Define deliverables of Outsourcing Project;
  3. Select the best suitable service provider;
  4. Develop a good legal contract with well-defined exit clauses;
  5. Develop Business Operating procedures;
  6. Engage actively in managing the process;
  7. Measure the performance;
  8. Reward the extra-ordinary performance.

Cartoon Source: http://capewest.ca/cartoons.html

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