03 MARCH 2016

Members of The Faculty’s Melbourne CPO Roundtable participated in an interesting debate on the topic of offshoring at their February gathering at The Faculty Headquarters in East Melbourne.

The term “offshoring” provokes a different set of reactions depending on industry sectors, business objectives and team capability. Some CPOs see it as a regular and expected part of their role to find efficiencies and cut costs. Others (particularly in the public sector) regard offshoring as an extremely difficult option, considering the priorities of government to support local communities and small businesses. 

If your organisation has directed a reduction in head-count, offshoring and outsourcing is often seen as the solution to maintaining the service with a smaller central team. The first question to be asked often revolves around which low-cost country suits your needs. Important factors to consider include cost, time-zone, economic and political stability, supply chain infrastructure, language and cultural differences. Melbourne Roundtable members shared their opinions on the relative merits of outsourcing to China and Hong Kong, Indonesia, Vietnam, Thailand, Singapore, Eastern Europe (particularly Hungary and Poland) and India.

The potential level of responsibility assigned to the overseas team was also discussed. Depending on requirements, the offshore team could take ownership of:

  • Procurement administrative support
  • Transactional procurement
  • Tactical procurement
  • (In some cases) strategic procurement
  • Supplier development and real-time quality resolution.

The biggest challenges, particularly in the tactical and strategic space, lie around infrastructure, supply chain sustainability, language and cultural barriers. With the growing importance of strong and enduring relationships built around strategic communication, CPOs may be justifiably concerned that relationships with key suppliers may suffer. Solutions brainstormed by the Roundtable include:

    1. Making an intelligent choice about which low-cost country suits your organisation’s needs in the short, medium and long term, with a focus on cultural fit.

    2. Investing in capability around soft skills (such as influencing and negotiating) for offshore teams, and placing key members of your team with excellent soft skills in leadership roles.

    3. Identifying any cultural differences that may create an issue with your suppliers and investing in targeted training to mitigate those differences.

    4. Making it a priority to spend time personally setting up the offshore team, and regularly visiting the offshore team as often as possible.

    5. Make sure that offshore professionals feel they are a part of the central team.

    6. Establish clear ground rules about process, policy, reporting lines and communication. Set the parameters up-front. At the same time, ensure you give the offshore team the freedom to think laterally and take full ownership of their activities.

    7. Set up a three-way “buddy system” between offshore team members with technical knowledge, those with strong communication skills, and someone from the head office.

    8. Establish a rotation program where your central team members spend six months in the offshore team as part of their learning and development.

    9. Set up regular conference calls and bring key members of the offshore team into the head office for strategy days and relationship building.

    10. The Faculty’s General Manager Keith Bird summed up the discussion by drawing upon his outsourcing experience gained across multiple industry sectors: “Building a successful offshore team is about four key factors: relationship, trust, accountability and rules of engagement”.

    The Faculty Roundtable comprises of an influential group of procurement leaders who gather to share their experiences and insights, to achieve greater commercial success for their organisations. Through The Roundtable, members have access to leading-edge thought leadership and commentators, a ready supply of valuable expertise through exclusive market intelligence, as well as networking and professional development opportunities for themselves and their team members.

    The Asia-Pacific CPO Forum is the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level. It is a once-a-year opportunity for leading Chief Procurement Officers to engage with peers and like-minded business leaders in an intimate and interactive setting. The Forum is designed for delegates to facilitate the sharing of best practice strategies, develop innovative and responsive procurement approaches, and hear from a compelling speaker line-up of influential thinkers, eminent business leaders and commercially creative minds.

    In 2016, The 9th Annual Asia-Pacific CPO Forum will held on 18th and 19th May in Melbourne, Australia. For more information contact Program Manager, Belinda Toohey, on +61 3 9654 4900 or via email.​ 

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