It is certainly a buyer’s market when it comes to outsourcing services in the consumer goods industry. Here, Kimberly Knickle, practice director for IDC Manufacturing Insights, explains why this is the case, and includes some of the more unique processes consumer goods companies will outsource in the upcoming year.
Can you comment on this list?
Knickle: Accenture once again tops this list, and perhaps this reflects the buyers’ interest in services partners that can deliver a wide range of offerings, including those that rely on packaged technologies. Deloitte is a new name this year, although it has participated in this market for some time. More generally, we’re pleased to note that consumer goods companies have many viable options. This gives manufacturers the flexibility to outsource commodity or expertise-based functions, to place their own unique requirements on the relationship, and to explore how the relationship may develop over time. All in all, this is a good sign for buyers.
Which business processes are consumer goods manufacturers outsourcing today?
Knickle: At IDC Manufacturing Insights, we’ve noted that the most commonly outsourced processes are usually the ones that don’t provide competitive differentiation, but I think that we should clarify that point somewhat. It’s perhaps more accurate to say that doing those processes well consistently is a necessity, like transportation and warehouse management. I think the expectation today that is different from five years ago is that outsourcers must be able to improve and adapt those processes to changing market demands. For example, we expect more manufacturers to pursue a micro logistics network approach to shorten delivery times, and the best outsourcers are going to help their customers do that. In fact, I’d say what has changed is that it’s even more critical for outsourcers to help their consumer goods clients become even more customer and consumer-centric.
What are some of the more unique processes that consumer companies will outsource in the coming year?
Knickle: In our Top 10 predictions, we’ve identified the priority that manufacturers are going to place on industry clouds, effectively digital networks that they may use for information sharing, collaboration, and commerce, depending on their business requirements. These are joint IT and business projects, and we believe that consumer goods manufacturers are going to need help making these a practical reality. And I specifically use the word practical because we want them to be cost effective investments that don’t distract them from their core business focus. That translates into a need for technology-savvy partners to do a lot of the heavy lifting, and much of the work will be done through outsourcing arrangements. I think it’s an exciting year for manufacturers to work with outsourcers to deliver business benefits.