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A new paradigm in supply chain outsourcing

Read how supply chain outsourcing is changing, and how both third-party logistics companies and services companies must adapt.


Supply chain outsourcing 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 outsourcing-based opportunities include planning, direct procurement, order management and reverse logistics.

Two types of primary 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 outsourcing opportunities under the aegis of a single provider.

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


The increasing complexity of the supply chain has made business process outsourcing (BPO) increasingly viable and attractive. The sources of this complexity include the need for advanced tools, low-cost-country sourcing, Lean techniques, and an increasingly demanding and diverse customer base. In addition, companies are having a hard time recruiting supply chain talent.

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

  • Third-party logistics providers include companies like DHL, UPS, FedEx and CEVA. They expanded and upgraded their services during the 1990s and 2000s to meet new demand, and have built ever-larger networks. Now they are expanding beyond their core, physical, asset-based activities to business process areas outside of logistics.

  • Professional services firms, including Accenture, CapGemini and IBM, are using their skills in other outsourcing areas (HR, finance and accounting, procurement and so on) to gain a foothold in supply chain BPO. They have strong operational know-how in BPO, as well as a deep pool of existing clients with which to explore supply chain BPO opportunities.


Since the late 1990s, BPO services have passed through four generations. Cost reduction was, and remains, a top priority, but clients now expect BPO to provide value in more forms (increased competitiveness, higher margins, greater growth potential and so on). 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 business operations.

Focused on activities such as planning, direct procurement and after-market service and support, the outsourcing of supply chain business processes clearly epitomizes this shift to relationships that are analytics-based, value focused and committed to a wider range of delivered benefits.

Outsourcing providers that possess fourth-generation capabilities—and are well positioned to adopt next-generation characteristics such as on-demand services, standardized platforms and use of social media—will be best positioned to garner more supply chain BPO business.


Delivering business outcomes that go beyond cost reduction is quickly becoming a table stakes capability, a prerequisite that outsourcing service providers of either ilk must possess to meet client expectations. However, Accenture also believes that two key characteristics are needed to enhance fourth-generation acumen and win supply chain BPO 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.


Bob Gosier is a senior manager in the Accenture Supply Chain Management service line, and is based in Atlanta, Georgia. He has an extensive background in logistics operations, with an emphasis on the operation and design of transportation networks. His experience spans multiple industries including resources, telecommunications and automotive. He has also held senior management positions in third-party logistics, directing transportation and distribution management services and the operation of dedicated fleets.

Scott O’Day is a manager in Accenture’s Supply Chain Business Process Outsourcing practice. Based in Boston, Massachusetts, his focus to date has included working 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, which involved helping operations management teams plan, execute, and optimize operations.