Weathering turbulent times

Each day and week, we continue to read about the global challenges people worldwide are facing.

These challenges include:

1. Massive losses and writeoffs in the financial services industry;
2. Increasing inflationary threats; and
3. Soaring energy prices.

What impact can these dislocating events have on the sourcing industry? I would offer a few thoughts...

The pursuit of scale and cost efficiencies will continue unabated. When dealing with financial pressures, many companies look to outsourcing as a way to variablize their costs as well as reduce them. Financial services companies with their writedowns, airlines with their crippling fuel bills and soon, manufacturers with their escalating transportation costs will all look to sourcing as a way to relieve some of that pressure.

The singular pursuit of labor arbitrage without accompanying quality, efficiency and productivity improvements, is proving to be ill-fated. Who would guess that we might see the U.S. become a low-cost location for Canada instead of the reverse?

The continued movement of work in search of even lower cost regions will continue, but with an ever-diminishing return such that the transition cost and disruption cost will outweigh the savings unless quality, efficiency and productivity improvements can also be incorporated.

The movement of work to the worker will continue and accelerate. To reduce the impact of energy prices, companies will look for ways to reduce transport costs--not just for products, but also for people.

The telecommunications companies that can make it easy to seamlessly and securely interconnect homes with businesses will undoubtedly benefit from this. People think Japan is lagging with regard to working from home, but there is a very significant Japanese company that is re-engineering its entire network access and security so that people can work from anywhere, including their home, without creating security issues.

Predicting winners is challenging, but there will be both buyers and sellers of services that will emerge not just unscathed but stronger. Is your company one of those?

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Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.