7 ways - mi Trans International - Connecting Nations

1. Ensure BPO
Ensure BPO is a CEO priority In uncertain times, sponsorship for critical initiatives such as BPO must come from the very top. Only the CEO can deliver the message that there  are no other options for survival. Otherwise, the imperative for outsourcing is not taken very seriously, and management sees implementation as optional, easily finding ways to opt out, with arguments ranging from "outsourcing never works, we've tried  it," to "the process is too critical to outsource" to "I have to implement new systems first". As many logistics companies with a history of private ownership try to stay afloat in the current environment and attempt to reinvent themselves to stay ahead  of the competition, there is clearly no time to lose or room for 'management by consensus'. This is a decision for the CEO and no half measures will work. BPO succeeds for logistics companies when there is clear visibility of the CEO behind the wheel.

2. Approach outsourcing
Approach outsourcing with an open mind The BPO industry has moved well beyond delivery of volume-based voice and data work into highly complex industry and insight processes - think freight audit, tariff filing and maintenance, claims management, billing,  exceptions management and marketing analytics. Therefore, smart companies collaborate with providers to determine 'the art of the possible.' They start the outsourcing discussion by saying, "This is where we need to get to, so how do we get there?". In  the logistics industry, there are a number of companies that are improving their operating ratios by moving processes offshore, either to captive operations or to third-party providers. Ocean carriers including Maersk, APL, Hapag-Lloyd, NYK, MOL and CSAV  initially pioneered the move offshore, by setting up delivery centers in India and other lower cost countries such as Malaysia and China. And third-party logistics companies such as FedEx, Exel, Penske, Ryder, Yellow and Bax Global are taking the next  step by outsourcing to external BPO providers. Processes delivered offshore include not only rules-based work such as export documentation, and time sensitive shipment updates and tracking, but also more complex finance processes such as accounts receivable  and consolidation of books.

3. Keep it simple
Speed to cost reduction with no diminution of quality should be the first and foremost objective of BPO as a survival tool. This is not the time to radically transform business processes, implement new enterprise technology, put in the latest bells and  whistles or conduct a wholesale overhaul of the logistics industry business model. Keeping it simple means being realistic about the aspirations for the program in times of economic uncertainty, and focusing only on obtaining the benefits that truly matter  now. Thus, logistics companies should strongly consider outsourcing their simplest, most repetitive documentation processes such as bill of lading and freight cargo receipt processing, billing, airway bill manifesting, driver logs entry, and freight bill  capture and audit on an 'as is' basis. A BPO service provider with expertise in these areas can deliver cost savings for their clients in as little as 90 days.

4. Move fast
Companies can quickly put in place outsourcing programs by mandating that aggressive timelines are a must. Truth is, there is no change without urgency. If moving quickly to implement BPO is not seen as vital to the basic survival of the company, it will  not produce the desired results. But imposing deadlines for the development and implementation of a roadmap including scope, provider selection and transition will mobilize the organization. For example, when a multibillion dollar North American shipping  company decided to move its export documentation process in Europe and the U.S. to India, the CEO set an internal deadline of reducing onshore headcount by December 31st of that year to ensure that lower operating costs kicked in as of the start of the  new fiscal year. Establishing clear deadlines, especially when mandated by the CEO, gets the entire organization focused and moving quickly to reap the benefits.

5. Develop a realistic deployment plan
Even when outsourcing is being implemented for cost savings, many companies push for or buy into an unrealistic transition roadmap in their haste to cut out more cost. And when the first failure occurs because processes cannot be thoroughly documented,  the network is not ready or work shadowing is insufficient, the naysayers come out in force. A deployment strategy that builds up steam over time after the success of initial phases is far more likely to meet objectives. For example, due to the geographically  dispersed nature of the logistics industry, a key initial consideration is which operating regions are better suited to consolidation via outsourcing benefits than others. In many cases, if in-house shared services centers (MI-TRANS) already exist, developing  an offshoring plan through the MI-TRANS may be the logical place to begin, with other regions following suit in a phased approach.

6. Insist on alignment and industry knowledge
Partnering with a BPO provider who understands you are the client, and will align with your ways of working - rather than impose its own - is vital in good times and bad. Alignment refers to understanding  the client's values and accordingly adjusting its working style, designing its deliverables to support the client's needs and having the flexibility to meet ever changing business needs in this economic climate. Equally important is deep industry knowledge.  If a provider isn't highly experienced in processing bills of lading, freight bills, driver logs and commodity classification, and is unfamiliar with the underlying rules of freight, duties and taxes in different operating regions, entrusting delivery  of those processes to that third-party can quickly 'sink a ship.'

7. Debit budgets in advance
This little trick obtains commitment where it counts - in the budget process. Building BPO savings into the current year's budget in advance ensures managers have no excuse but to be committed to the implementation of the BPO program or find some other  way to get the cost out fast. Truth be told, short of cutting staff to the bone, there is rarely another way. This is particularly true in cost center functions such as documentation, freight audit, driver logs, claims and finance and accounting. A BPO  provider with logistics domain expertise knows the extent of cost savings attainable for outsourced processes, and can work with the client to craft a scope of services specifically designed to achieve budget goals.

Advantages logistics companies gain by moving to a BPO model Rapidly reduce cost by sourcing processes with scale With industry-wide declines in operating margins in 2008 of between 10 to 40 percent and pessimistic outlooks for 2009 where flat growth  will be considered "success", the need to reduce the cost base to align with volume and revenue projections has never been more urgent. For example, document processing as part of the value chain accounts for 35 to 50 percent of total personnel costs  in the logistics industry. This people - time - and money-consuming process can easily be selected as the first candidate for outsourcing to a third-party with the scale to deliver these processes at a significant cost savings, leading to a more expansive  BPO program to further decrease operating costs.

Standardize business processes
Consolidating business processes offshore in an effort to reduce cost has a positive by-product - levels of standardization that are difficult to achieve through incremental efforts such as process reengineering when times are easier. With standardization,  organizations are well positioned to take the next step to transform processes through technology and quality, which takes them to the next level of efficiency. For example, a leading NVOCC successfully standardized its import manifest process across  13 countries by moving it to an offshore BPO provider. By standardizing how every single field is captured with the exception of specific regulatory or critical local requirements the company now has a more robust MIS capability and a uniform process  across its operating regions, performed with fewer resources at lower cost.

Rationalize the delivery model
The greatest challenge in moving to a shared services, or horizontal structure is overcoming misconceptions and fears about diminution of service levels, risk and performance. By wrenching processes out of the business lines in the name of corporate survival,  the objections which delay or derail consolidation and centralization are, in effect, overcome. In an outsourced environment, the scale, expertise, flexibility and cost savings quickly become evident. BPO providers can readily and rapidly tap offshore  talent pools to deliver business processes at a significantly reduced cost. Moreover, given enhanced and redundant communications and connectivity infrastructures, shipping documents can just as easily and transparently be processed in Mumbai, Mexico  City or Manila. For example, with 24x7 availability of skilled staff, BPO has emerged as one of the only strategies with which logistics companies are able to ensure a turn around time of less than one hour for bills of lading and airway bills with nearly  100 percent accuracy. In fact, some processes such as freight audit or duplicate payments analysis cannot be delivered cost-effectively without tapping into BPO's lower cost base.

Commercialize the approach to operations Most companies cannot put a price on the cost of processing a bill of lading, driver log or airway bill, collecting a receivable or interacting with a customer. Imposing the discipline of a BPO contract replete  with unit cost, turn around times and customer satisfaction levels makes the organization think differently about consumption and service levels, making the actual cost to sell a product or service transparent. By partnering with a knowledgeable BPO provider  and implementing a transaction-based pricing model, logistics companies can typically reduce their transaction processing expenses by as much as 30 to 50 percent. Specifically, the in-house cost of processing a bill of lading can run $5.00 - $8.00, while  offshoring can reduce the expense to $2.00 - $4.00. And processing an airway bill can cost a logistics company between $0.30 - $0.40, but an offshore can deliver at a cost in the range of $0.10 - $0.20.