The decision to outsource services usually is based on trying to improve customer service and customer satisfaction, and almost any function can be outsourced. It can occur because you find your employees no longer have the needed skills to meet customer needs; you can’t justify the required investment in technology; or you decide it’s time to spend your resources focusing on your core business.
Whatever the reason, it is critical that you find the right outsource provider because you want to make sure they will do a better job than you could do with your internal staff, tooling, technology and your money.
The first thing to look for is a company that has a history of quality and sustained services – in other words, a business that has been providing service for a long period of time. Not only should you look for the history, but also you want an organization that has continued to grow and add value to their service offering. In essence, they need to demonstrate that they can “bolt on” additional service to their core offerings and grow with new capabilities that you will need to continue to compete in your industry.
You also should be concerned with the management of the organization. Try to find out how long key managers have been with the company. How stable is the management team? Have managers been in their positions for some time or is it a revolving door at the management level? In general, how a company treats its employees is probably going to be the same way they treat customers.
Focus some of your attention on the providers’ financial strength. Will they be able to support your operation? Are they willing or capable of investing in an opportunity to partner with your company? Check out their credit references, talk to existing customers about the implementation and startup teams that initially forged the relationship. Another key area are their vendors. Do they pay them on a timely basis or are they struggling to pay the bills?
Next, check out their existing customer base. Find out not only who their customers are, but also how long those customers have been working with the service provider. You are looking for longevity of relationships because that is a sign that the customer’s expectations are being met.
If you are a smaller fleet, note the size of some of the service provider’s customers. Larger customers have the ability to do a more thorough job of due diligence, and you can take some comfort in the fact that if the big guys have long standing relationships with the service provider they are a provider worth considering for your business. Of course, the price of the service has to be right.
Communication is key to any successful relationship, so you will want to make sure the company you contract with is good at communicating its successes and failures.
You want to know how they are going to monitor your key performance indicators and alert you when they are falling short of agreed upon goals. You need to have visibility into your account and receive data and reports on a regular basis that allow you and the service provider each to make good decisions going forward.
One other key area to discuss is how will they prepare to take over the aspect of your operation that you are outsourcing. What’s the plan for going from your team managing a function today to their team managing it tomorrow? Have they told you how the change will impact your employees and your customers? And how will they interact with those two key groups?
Ultimately, when you look to outsource a portion of your business, you are looking for someone to become your partner; someone who is willing to work with you to put together the best operational and financial packages.
For the partnership to work, both sides must be honest about the information they provide and be clear about goals and expectations. Ask as many questions as you like and make sure you respond truthfully to questions asked of you.
The biggest reason outsourcing relationships fail is because information is not exchanged in a clear, concise and honest manner. You don’t want the service provider to keep anything from you, and you shouldn’t keep information from them. If the relationship is going to work, the company with which you are outsourcing should be asking you as many questions about your operation as you are about theirs. This will lead to both sides being satisfied with the deal.
Wolfgang Marschhauser is Senior Vice President of Sales/Marketing at Transervice Logistics Inc. A 40-year veteran of the transportation and logistics industry, he currently leads the North American business development efforts for Transervice. Prior to joining the company in 2000, he was the Director of Business Development for Ryder Integrated Logistics.