Supply chains see benefits in outsourcing infrastructure, study finds

Stanford University researchers recently completed a study on the return on investment from outsourcing the technology infrastructure for supply chains. The sample size was small, but the results worth a look.

Barchi Gillai, research director at Stanford’s Global Supply Chain Management Forum, found that when companies outsource some or all business-to-business e-commerce technology and processes, the benefits on average amount to more than twice the cost.

The study included a survey and was followed by in-depth interviews with most of the respondents. The sample size was just 25, and in various industries, not all in electronics. But the in-depth interviews rounded out the findings and provide some insight into outsourcing B2B infrastructure. At any rate, the findings are probably less interesting than some of the issues raised in the report, “Driving Business Value Through B2B Outsourcing: Improving Business Performance, Trading Partner Satisfaction, and B2B Capabilities.”

According to Gillai, benefits on average amounted to 2.5 times the costs of outsourcing B2B infrastructure. All but one survey respondent reported that their expectations for B2B outsourcing were met or surpassed, according to Gillai. The supply chains studied also reduced the number of employees needed to run complicated supply chain networks.

In the survey, 75 percent of the respondents reported improvement in their B2B technical capabilities; 55 percent reported an increase in predictability of B2B IT costs; 62 percent reported an increase in customer satisfaction; 57 percent reported higher productivity of internal IT resources.

We’re interested in the experiences Technology Forecasters members have had in outsourcing part, or all, of their B2B supply chain infrastructure. Please write a post.

Posted by Bill Roberts, November 9th, 2007