Aligning outsourcing relationships: a resource portfolio approach

The outsourcing type of business relationships are commonly used in supply chain and logistics industry. To respond to the volatile market needs, business customers acquire, integrate and utilize various resources and competence of third party service providers through outsourcing relationships. Generally, resources like physical assets, capital, technology, people, processes and competence are combined between a customer and its suppliers.

At the start of an outsourcing relationship, customer and suppliers mutually understand specific contractual resource commitment to effectively engage and utilize necessary resources and competence. This can be achieved through developing standardized routines and processes. As the relationship proceeds, the actors monitor the way they work together and adjust the utilization of resources.

Actors control their resource utilization against agreed benchmarks and cost limits to perform better in the relationship. Actors regularly coordinate with each other to improve the routine processes. Actors with autonomous decision-making can quickly engage or remove resources to respond to the business needs. The organizational culture drives the attitude of the management and employees, and weaves the resources, activities, and actors together creating a timely and harmonious association to achieve the desired outcomes of the outsourcing relationship.