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Casual Articles - Outsourcing And (Reducing) Transaction Costs (End)
The old saying 'You have to spend money to make money' can be a dangerous one. Every business has it's costs, but not every business owner takes the time to distinguish between what is an essential expense, and what is a 'nice to have' expense.And on top of needless exp
Outsourcing has only become possible because of the existence of a market for those specific business processes. And with the market, there is a price coordinating mechanism.
Yet, that market is based on some characteristics. Standardization is one part of this. If there is no standard, there is no standard price, no benchmark but a lot of ineffic
It is rather difficult to read the ordinary signboards in the dark. For this very reason, many signboards incorporate neon, since it glows in the dark. The Neon signs are a big relief to night travelers specially, as they are easily able to identify and adhere to road signs an
So what you need to do is; optimize the communication and the interfaces between your company and the sourcing partner:
First of all: minimize the control. Minimize the amount of control. This control is correlated with the number of exceptions; the more you can standardize the process the less control you need.
You should also minimize the manual exceptions. If there is a manual interface between the two organizations, make sure this is minimized. The "shortcut" in the previous situation where you could knock on the door and solve a problem is no longer possible (too costly).
At last, use the best of both systems. An outsourcing partner has its own configuration or structure of systems. These systems are designed to in-source large numbers (of transactions); your company is only one of the many that uses this outsourcing partner. The more you can surf along on the standard that is already designed by the existing companies that are connected the fewer problems you will face. And, the more cost effective.
These three issues only address the operational situation. What you need to know upfront is that your requirements and those of the sourcing partner match.
And...before you go into the (detailed) design -– do not forget about the inefficiencies.
Outsourcing has only become possible because of the existence of a market for those specific business processes. And with the market, there is a price coordinating mechanism.
Yet, that market is based on some characteristics. Standardization is one part of this. If there is no standard, there is no standard price, no benchmark but a lot of ineffici
I was waiting for my fast-food breakfast while my cohort of four little girls scurried over the indoor Big Toy."They're sure taking their time today," grumbled the man next to me. He wasn't talking about my granddaughters.He was wearing a purple tee-shirt over hi
You should also minimize the manual exceptions. If there is a manual interface between the two organizations, make sure this is minimized. The "shortcut" in the previous situation where you could knock on the door and solve a problem is no longer possible (too costly).
At last, use the best of both systems. An outsourcing partner has its own configuration or structure of systems. These systems are designed to in-source large numbers (of transactions); your company is only one of the many that uses this outsourcing partner. The more you can surf along on the standard that is already designed by the existing companies that are connected the fewer problems you will face. And, the more cost effective.
These three issues only address the operational situation. What you need to know upfront is that your requirements and those of the sourcing partner match.
And...before you go into the (detailed) design -– do not forget about the inefficiencies.
Outsourcing has only become possible because of the existence of a market for those specific business processes. And with the market, there is a price coordinating mechanism.
Yet, that market is based on some characteristics. Standardization is one part of this. If there is no standard, there is no standard price, no benchmark but a lot of ineffic
The preference to stay as we are right now is the norm rather than exception. The uncertainty and risk associated with new things and new ideas are the main reason for the avoidance attitude. We need to adapt and change to survive. Remaining status quo is not going to bring yo
At last, use the best of both systems. An outsourcing partner has its own configuration or structure of systems. These systems are designed to in-source large numbers (of transactions); your company is only one of the many that uses this outsourcing partner. The more you can surf along on the standard that is already designed by the existing companies that are connected the fewer problems you will face. And, the more cost effective.
These three issues only address the operational situation. What you need to know upfront is that your requirements and those of the sourcing partner match.
And...before you go into the (detailed) design -– do not forget about the inefficiencies.
Outsourcing has only become possible because of the existence of a market for those specific business processes. And with the market, there is a price coordinating mechanism.
Yet, that market is based on some characteristics. Standardization is one part of this. If there is no standard, there is no standard price, no benchmark but a lot of ineffic
The federal, state and local government agencies throughout the United States are looking to do business with women-owned firms like never before. One of the key reasons is that women-owned firms in the U.S. are growing like never before.The federal government, along wi
These three issues only address the operational situation. What you need to know upfront is that your requirements and those of the sourcing partner match.
And...before you go into the (detailed) design -– do not forget about the inefficiencies.
Outsourcing has only become possible because of the existence of a market for those specific business processes. And with the market, there is a price coordinating mechanism.
Yet, that market is based on some characteristics. Standardization is one part of this. If there is no standard, there is no standard price, no benchmark but a lot of ineffic
How you meet and greet new people shapes your personal brand and reputation long before your successes, community contributions, and stories earn editorial consideration by the media.Everyone you meet around town at networking functions, conferences, and other venues is
Outsourcing has only become possible because of the existence of a market for those specific business processes. And with the market, there is a price coordinating mechanism.
Yet, that market is based on some characteristics. Standardization is one part of this. If there is no standard, there is no standard price, no benchmark but a lot of inefficiencies that you need to manage with contracts.
If you design – the outsourcing process – with too many exceptions, because there is no market solution (standard) yet, the sourcing will not reduce transaction costs. It rather will increase them.
You’d better know this in advance, before continuing the deal, or start the negotiations.
© 2006 Hans Bool
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