Managing Relationships in Outsourcing Process

Modern world is all about networking and relationships. In order to be successful in a team and networking environment one should develop the skills to manage relationships successfully in order to be successful. Managing Relationships is highly balancing act and it needs tact and diplomacy to be successful.

The focus of today’s discussion is managing business relationships. In order to be successful in a global economy, you need strategic alliances working for you. Strategic alliances mean establishing bonding with external forces who could be your business partners. In general any relationship goes through four important stages and they are Courtship, Hardship, Battleship and Relationship. In my opinion these stages are relevant in a friendship, any relationship, marriage, and in business also. As the focus area is managing relationships in Logistics Outsourcing Environment, the four steps mentioned above are very relevant.

As shown in the below graphic, in the initial stages of outsourcing, both parties involved would be going through a happy time. This is the initial phase of outsourcing process. The 3rd Party would be trying their best to win the confidence of the outsourcing company and at the same time, outsourcing company will not leave any stone unturned to impress the 3rd party about the business proposition. At this stage both parties are on equal terms.

Once the contract is awarded, and during the implementation stage, the relationship goes through a strange transformation. The relationship at this stage could be described as master and slave relationship. The third party is struggling to translate promises to deliverables and outsourcing company gradually distances from implementation in order to focus on more core functions of the business. If the implementation goes through successfully, the bonding becomes stronger. However, in majority of the cases, the implementation phase goes through rough weather due to various reasons such as tough deliverables, unrealistic expectations, costing inefficiencies, lack of expertise or lack of clarity on business processes and due to lack of active participation by the outsourcing company etc.

At this stages if both parties recognize the importance of forging a solid relationship in order to achieve the targeted benefits of outsourcing, the process of outsourcing could become successful. However, if the impasse continues in the relationship, the next stage would be hardship. The relationship moves from struggle to resistance or denial stage. This is the final phase of reconciliation and reconstruction. If both parties do not act and address the issue jointly, the relationship fails and outsourcing becomes a logistical nightmare.

If parties involved understand the importance of making the outsourcing process a success and invest time, resources and efforts to resolve issues that are causing heartburn, the outsourcing process could prove to be innovative business decision and relationships are established which could go a long way in achieving business objectives.

It takes two hands to clap and in any successful relationship, we need collective participation and trust is the foundation. In order to make Logistics Outsourcing a success, we need trusting partners, collective participation, willingness to revisit deliverable, targeting realistic expectations and finally tight financial model will help businesses to outsource non-core functions and focus on core capabilities. Where trust is the foundation for the relation, where is the question of betrayal and failure.