Skip to main content Skip to Footer

LATEST THINKING


A new paradigm in supply chain BPS

Read how supply chain business process services (BPS) are changing, and how both third-party logistics companies and services companies must adapt.

Supply chain BPS is set to enter a new age as new opportunities—and demands—are made by companies in pursuit of high performance in a brutally competitive economic environment. These new opportunities include planning, direct procurement, order management and reverse logistics.

Two types of primary services and outsourcing providers—third-party logistics companies and professional services firms—are increasingly competing for this expanded range of work. The potential result is a broader range of integrated opportunities under the aegis of a single provider.

Accenture explores these issues, and identifies the success factors for both types of provider.

Background

Growing supply chain complexity makes business process services increasingly viable and attractive.

Two types of companies are vying for position in the supply chain BPS market:

  • Third-party logistics providers, such as DHL, UPS, FedEx and CEVA, which expanded and upgraded during the past two decades to keep pace with new demand. Now, these companies are expanding beyond their core, physical, asset-based activities to areas outside of logistics.

  • Professional services firms, including Accenture, CapGemini and IBM, which are applying skills in other outsourcing areas (HR, finance and accounting, procurement) to gain a foothold in supply chain BPS. They have strong operational know-how in outsourcing and a deep pool of existing clients.

Next Generations

Outsourcing services have evolved through four generations since the late 1990s.

Cost reduction was, and remains, a top priority. But clients now expect BPS to provide value in additional forms: increased competitiveness, higher margins and greater growth potential, for example.

To make this happen, providers must offer analytics and industry-based insights, deep functional knowledge of the outsourced process and an extensive understanding of each client's operations.

Outsourcing providers with fourth-generation capabilities and a mastery of on-demand services, standardized platforms and social media will be best-positioned to garner a bigger piece of the supply chain BPS market.

we recommend

Delivering outcomes beyond cost reduction is quickly becoming a table-stakes capability: It's a prerequisite outsourcing service providers of whatever variety must possess to meet client expectations.

However, we also believe two key characteristics are needed to enhance fourth-generation acumen and win supply chain BPS market share.

  • End-to-end supply chain capabilities. Ever-greater supply chain complexity and variability have made it more important to integrate supply chain activities (planning, sourcing and procurement, manufacturing, fulfillment and aftermarket services).

  • Extensive supply chain flexibility. To meet the flexibility requirements of clients, both professional services firms and third-party logistics providers must have access to a wide mix of people, tools and physical assets, and be able to scale the number and volume up or down rapidly as needed.

To meet client expectations for broader business-wide outcomes, third-party logistics providers and professional services firms will also have to develop more expertise in what the other currently does, while expanding access to physical assets, leading-edge tools and top supply chain talent.

The looming challenge for current and prospective clients is to determine which provider can best address their needs and strategic objectives.

About the Authors

Scott O’Day is a manager in Accenture's Supply Chain Business Process Services practice.

Based in Boston, Massachusetts, his experience includes work with aerospace and defense clients to improve supply chain performance through outsourcing, primarily in the direct procurement and aftermarket spaces.

Prior to joining Accenture, O'Day worked at FedEx Express as an industrial engineer, helping operations management teams plan, execute and optimize operations.