October 10, 2019
ISSN# 1545-2646
Outsourcing – Good Idea Sometimes?
Read any recent book or magazine article and you will find the author promoting the concept of holding your business to its core strengths and outsourcing the things that are not directly related to that focus. I too agree with the concept of outsourcing functions in your business for some strategic and tactical reasons. But outsourcing is not a resolution of all your business needs.
Let’s explore through a sample situation. Names and identities will remain undefined so put what ever organization name or department you would like to fill in the blanks with for this exercise. Maybe you might choose to plug in your own business to the example.
I recently had to resolve a vehicle violation for a transponder (the device which records toll entry and exit points on such highways throughout the states) that did not pick up a toll point. It appeared that the vehicle used the toll road with out paying the fees thus resulting in a citation/fine for its use. The normal toll is about $1.00 and the citation fine was for $26.00. Nice profit margin on that piece of business. Back to the example – the toll authority is in the business of providing quality road travel experiences by collecting fees for road usage. Those revenues are in turn used for maintenace and improvements to the toll road system. Let’s for the sake of discussion agree that is their core business focus. – Quality road and collection of offsetting fees.
This road authority outsources the paving and resurfacing of the actual roads as that is not their core expertise. They are not engineers nor have the investment in large renovation equipment. They do have maintenace level support fleet etc. The road authority also outsources some portions of their customer support. The initial traveler support for acquiring transponders, having money available for tolls and other vehicle related connections are handled directly by the road/toll authority directly. The part they outsourced is the citation/violation collection and resolution portion of their customer support. They apparently do not see this as part of their core customer support program.
In my attempt to resolve the issue with the toll authority, I was directed to a department specific to handling this matter. My original expectations were high in that I would be speaking with the folks who will dig into this and understand it was a transponder issue and remove the citation fines. To save you time and boring details, it took over 4+ hours of calls and on hold waiting for supervision support to make progress. I had to contact three different toll authorities and get them talking. Oddly enough, two of them who were the direct customer support teams for two of the authorities talked and all agreed to the resolution. I was to pay the cost of the toll $1.00 and the citation should be removed. Now enter the outsourced service from one of the toll authorities. After I provided the requested document and I verified with their service rep what was needed, I only received a letter in return indicating it did not meet with their requirements. I called and basically they said they can’t do anything unless I send them the document which meets their specific criterion.
At this point I called the direct customer support service entities and they all agreed it should be a nonissue. The third party was so rigid in their actions with me that they would not even move the situation to a supervisor nor reach out to the authority who employs them to handle these citation situations. This is when I engaged supervision again at one of the toll authorities and explained the nature of the experience. They were very understanding and apologized for the way the mater was handled.
This week take a look at the outsourcing your business is using or considering using. It might very well be a valuable choice to have a third party do a non-core competency of your organization. If you go in that direction, you need to make sure you have in place the necessary process for taking care of your customer. At the end of the day, the customer is yours to take care of. It is your brand reputation at stake. The third party simply turns off their phones and closes up shop if no one uses their service. If they put your reputation at risk then is that a good use of outsourcing?
JKL Associates understands both the brand and image implication and systems efficiency aspects of outsourcing so give us a call at (313) 527-7945 in Michigan or (407) 984-7246 in Florida. It is time you moved to a higher level of strategy execution.