Study Suggests Outsourcing Is Overlooked As Strategic Tool

By Deborah Austin By tapping non-core outsourcing as a quick fix rather than a big-picture strategic tool, automotive suppliers are compromising their strength in today's competitive market, says global consultancy Accenture. "Only a handful of companies recognize that aggressive and strategic use of outsourcing is important to their overall strategy," says Randy Barba, a partner in the Accenture automotive industry group. While 73% of respondents to an Accenture survey said they outsourced at least one business process -- such as payroll, procurement, or logistics -- another 27% were not using outsourcing of any kind. Only 21% planned an increase in outsourcing initiatives. The right mix of outsourcing can cut affected operating costs by 10% to 25% as well as reducing assets, says Barba. "OEMs are seeking ever greater levels of product innovation at lower costs from suppliers. Companies that outsource more of their non-core functions in order to focus on enhancing design, production, and manufacturing have a better chance of surviving a tough climate that mandates it, he says."

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