© GettyImages Show Use the Outsourcing Decision Matrix to decide whether to make it yourself or buy it in. How do you decide which activities to outsource, and which tasks to keep in-house? Let's say you're a manager in the healthcare industry. You'll likely hire your own internal specialists, like marketing or customer service. But what about the cleaning staff? Or buildings managers? Outsourcing can have a significant impact on your bottom line. It can reduce overheads, bring fresh expertise to your business, and free up your time for innovation and other vital tasks. But there are risks, too. You could lose control of proprietary information, or end up with products or services that don't meet your company's quality standards. So, how can you be sure that you're making the right choice? In this article, we look at how you can use the Outsourcing Decision Matrix to identify which tasks or processes you should keep in-house, and which you can safely outsource. What Is the Outsourcing Decision Matrix?The Outsourcing Decision Matrix (shown in figure 1, below) identifies the two most important factors that you should consider when you're thinking about outsourcing a task:
Figure 1 – The Outsourcing Decision MatrixThe Matrix is divided into quadrants, as follows:
How to Use the Outsourcing Decision MatrixSo, now that we know what each quadrant in the Matrix means, let's see how you can use it to determine whether you should outsource a task. Step 1: Identify the Task's Strategic ImportanceAnalyze the task's strategic importance to your business. Is it vital to your company's competitive advantage? Is it part of what makes your business unique? Does it play a major part in enticing customers to choose your product or service over those of a competitor? Step 2: Identify the Task's Contribution to Operational PerformanceDecide how important this task is to your company's day-to-day running. Will your operations "grind to a halt" if it's done badly, or not done at all?
Step 3: Plot the Task on the MatrixWhen you've worked out where your task or process lies on the vertical axis of strategic importance, and on the horizontal axis of operational performance, you can plot it onto the matrix. The quadrant in which the task falls will give you a strong indication as to whether you should outsource it, retain it, eliminate it, or form a strategic alliance. Of course, this is only a starting point for your outsourcing decision. You need to consider each situation carefully, and use your specialized knowledge of your organization, your suppliers, and your industry as a whole to judge each situation in context.
The Outsourcing Decision Matrix is a good starting point for making decisions about whether or not to outsource tasks in your business. Tasks that are strategically important to your organization should usually be kept in-house. This enables leaders to retain control over the organization's most vital processes. Tasks that must be done for an organization to be operationally effective, but which aren't important to overall strategy, can often be outsourced safely. For strategically important, but operationally insignificant tasks, you may benefit from forming a strategic alliance with an external supplier.
In order to continue enjoying our site, we ask that you confirm your identity as a human. Thank you very much for your cooperation. Which of the following statement isincorrectabout the mission?A.The mission states the rationale for the organization's existence.B.The mission statement provides the concept around which the firm can rally.C.Each functional area within the firm may develop its own strategy, but not its own supportingmission.D.The mission statement provides boundaries and focus for organizations. Which of the following is NOT a step in the factor-rating method to rate outsource providers?A.Assign importance weights to each of the factor.B.Assign points for each factor to each provider.C.Divide the ratings by the applicable weights.D.Multiply the ratings by the applicable weights. |