Supply Chain Brain

company not vested in your performance isn’t acting in your interest. Enlightened companies are ready for vested outsourcing. You’ve realized that the same way you’ve always done outsourcing has given the same results, so, it’s time for a change.

Q: You’re suggesting a paradigm shift of sorts.

Vitasek: It’s “what’s in it for we,” as I like to call it. When I win at the expense of my service provider, its really is not in my interest.

We’ve had a Jaguar partnership for 25 years, though not in true PBO until the early ‘90s. We moved from being a U.K. company to being present in most markets with them. Whether management or the boardroom has changed, the relationship has endured. Vodafone came to us off the back of what we did with Jaguar. They were growing hugely in the late ‘90s and needed a new fulfillment center set up. We built up credibility quickly with them and have built up the relationship since then.

Q: How widespread is the word on PBO, in your estimation? MacLaren: The topic has been around for quite some time, but many still don’t know about it. PBO is out there, but we need a better understanding of it. Why? A longstanding logistics services

Q: What’s the difficult part in PBO alliances?

MacLaren: Culturally we’re more aligned to transactions, meaning just paying for something. As we move to outcome-based relationships, we’re looking at joint destiny between two companies. It probably takes three to five years to build that needed trust. Once you get past that, and trust is built up, you move forward and go forward. It’s a shared-destiny model.

You need to think 10 to 15 years, whereas historically companies think about three years out at most.

Q: We keep talking about the need for a
cultural shift. What’s your view?
Fues: Performance-based outsourcing is a
challenge for some because it requires true
partnership rather than an every-man-for-
himself approach to business.

Q: You have a longstanding PBO relation-
ship with Whirlpool, right?
Fues: It didn’t start that way. We had a
contract with them for more than a decade,
but as time went on, we said how could
things get better. We have the proper met-
rics around the relationship, and the
proper people.

relationship is much better for all parties than a short-lived one based on single transactions.

Q: What kind of people are you talking about?

Fues: We have field engineers, systems experts and labor management specialists deployed to the field. It’s a leap of faith if you do these things, that’s there’s a pot of gold at the end. But we’re achieving a lot of success.

Both organizations are committed to it.

Q: Has the poor economy in any way served as a driver for exploring PBO?

MacLaren: Yes, it has. But the key for most companies is to realize they must transform the kind of relationships they have, away from short-term relationships to long-term ones. That’s the kind of journey we’ve been on with Jaguar and Vodafone.

Q: Tell us about them.

MacLaren: These are global brands with strong presence.

Q: How do you know you’re successful?

Fues: Many companies don’t define success, they just measure what they think is progress. It’s better to agree up front what you want to achieve, then you know when you’ve arrived. You have to have somebody who says we’re going to let this activity go and let you do it. You have to be brutally honest with the metrics. With the right ones, it will tell you about yourself, and it won’t always be good, but they spur you into correction.