What Is Business Process Outsourcing?

Business process outsourcing (BPO) refers to an enterprise inspecting business processes and corresponding functional departments, outsourcing these processes or functions to suppliers, and restructuring these processes by suppliers. BPO transfers all functions of the functional department (such as transaction processing, policy services, claims management, human resources, finance) to the supplier. Outsourcing vendors manage these functions in their systems based on service agreements. Some BPO contracts are paid based on service levels, linking supplier revenue to business performance or cost savings.

Business process outsourcing

Business process outsourcing (BPO) refers to enterprise inspection

From this definition, we can clarify three points: First, BPO is the outsourcing of part of the company's business, that is, the original processing by the company

BPO has many distinctive features that are conducive to accelerating the development of enterprises and may become " a new model for the development of companies in the 21st century ."

BPO trade and trade in goods

Researchers surveyed 145 company managers who have outsourced business processes. They found that if the company can evaluate the process to be outsourced based on several dimensions, and adapt the outsourcing contract to these dimensions, business process outsourcing has a great opportunity to achieve the desired results. The three interrelated latitudes are:

Complexity The extent to which people use different methods and procedures in their processes, and the lack of existing solutions.

The degree to which processes can be decomposed and changed without affecting other processes in the organization.

The degree to which a strategically important process can give a company a comparative advantage.

Researchers believe that any process has the potential to become an outsourced business process. However, to increase the likelihood of successful business process outsourcing, the two companies

More and more large European and American IT companies, financial institutions, and other service companies have optimized business resources through business process service outsourcing (BPO) without reducing product quality as much as possible, reducing their production costs. , Reducing operating risks, thereby enhancing the core competitiveness of the enterprise. In the face of the international service outsourcing market, which contains a lot of business opportunities, more and more countries with the ability to accept contracts are becoming the ideal overseas subcontracting sites for European and American companies. The international outsourcing industry market has formed with the Indian market as the core, including

Business process outsourcing

Outsourcing is a viable option for businesses. There can be many different reasons for business outsourcing-increasing shareholder value, reducing costs, business conversion, improving operations, overcoming internal business capability deficiencies, keeping pace with competitors, gaining a competitive advantage, expanding sales, improving services, reducing inventory, increasing Inventory turnover, reducing capital investment burden, increasing cash flow, converting fixed costs to variable costs, and other tangible and intangible benefits. Outsourcing is used in any business unit of the enterprise-most of which are defined as non-core business components-accounting, law, human resources, information technology, manufacturing, sales, procurement and logistics / supply chain management. Note that the core and non-core business capabilities of different companies and industries are different. Non-core business capabilities may also be important and critical for an enterprise. To the maximum extent, both outsourcing and business process outsourcing can be used to create a successful business if done right.

3PL Business Process Outsourcing 3PL

Third-party logistics is already a leader in the field of logistics outsourcing. Planning the core business of third-party logistics, whether it is responsible for shipping, transshipment or warehousing, they provide services to customers. It shows a way for a goods / service logistics provider to get more profit and bundle services. Consumers are very eager to reduce costs, and this is exactly what the third party logistics can provide. For outsourced logistics providers, whether in China, internationally or even globally, the potential market opportunities are huge. But something happened on this yellow brick road. Many companies fail in their own business conversions for a variety of reasons. Some third-party logistics providers have not changed from the original core commodity services to true multi-service providers; or international third-party logistics has not yet understood how to provide services; or Chinese third-party logistics has not successfully invested in international logistics services.

The failure of some other third-party logistics companies is related to their inability to achieve differentiated competition. Some third-party logistics providers do not have a good market positioning. Or the parent company did not give them sufficient resources, especially sales resources, to achieve penetration of existing customers. Other companies have commercialized their third-party logistics services, but in the process, they have not accurately planned what they want to achieve as a third-party logistics company. These shortcomings have made some third-party logistics companies develop slowly in both existing customer retention and new customer expansion. The differentiation of the third-party logistics department not only reflects the uncertainty of the third-party logistics providers' self-understanding, but also reflects the diversification of customer needs.

4PL Business Process Outsourcing 4PL

Business process outsourcing contains more connotations of traditional outsourcing. Outsourcing usually needs to assume a series of tasks, tasks, responsibilities or functions, and pass these tasks, tasks, etc. to external service providers. Business process outsourcing includes this and more. Business process outsourcing service providers bring a completely different perspective, knowledge, experience, and technology from existing capabilities. Business process outsourcing can also work with companies and improve existing processes or design new ones. This is an output-based result, not just a matter of pure cost reduction. The new process will influence or integrate into the enterprise in a new way, which can bring value to customers, even expected profits and shareholder value.

Due to the service space left by third-party logistics companies, fourth-party logistics has emerged. Fourth-party logistics providers and third-party logistics providers are very different. Fourth-party logistics is a provider of business process outsourcing. This leading logistics provider will bring value and design a new approach to meet customer needs. Fourth-party logistics is neutral, it will manage the logistics process, regardless of who the delivery, carrier and warehouse partner with the enterprise. Fourth-party logistics can and will manage third-party logistics providers that work with customers.

This new international logistics service provider will tailor a solution for each customer's unique and special needs, without having to consider the services and operations provided by the parent company. Companies understand the key to process, people and technology success. An excellent fourth party logistics has good experience and vision in providing services to prospective customers. This means accurately grasping complex customer needs and providing various feasible solutions to maintain customer satisfaction and retain existing customers.

To achieve the desired goals and outputs, BPO providers look for incentives and characteristics that define relationships and work with each customer. Fourth Party Logistics hopes to position itself as an extension and partner of customers. Business process providers often recognize the important role of information technology in managing processes.

Fourth Party Logistics Example: Supply Chain Management in Asia For the United States, Asia is a major trading region. One of the more complex logistics issues is inland supply chain management starting in Asia. How do you manage critical supply chains and suppliers located thousands of miles away in different countries and time zones? Managing this important part of the supply chain is both headache and time consuming. In order to meet the needs of delivery, the seller determines the shipment date, the uncertainty of the order, and provides guidance to the loader or third-party logistics are challenges that need to be faced and handled. Not only is it a seamless process, it has many more features than processes.

Asian suppliers often do not have the necessary understanding of the supply chain and its customers' requirements for delivery time, but simply pursue cheap freight rates. For American companies, this part of the business is extremely important and at the same time complex and changeable, making it harder to operate. Time differences limit communications to email, fax, and simple phone calls at night. Inventory allocation, order management, remote supplier management, ocean carrier or shipper management of distant third logistics, container transportation in the United States, and full tracking of each order will become difficult. Email and fax are ineffective in managing and tracking orders, managing suppliers, and even the entire supply chain. Delays and supply chain failures can cause confusion in US companies.

International logistics business process outsourcing providers will work with customers to enable them to understand their special circumstances and their needs, comprehensively understand each supplier and its key objects, and define key points. Fourth Party Logistics will redesign the process, focusing on certain special suppliers or carriers in order to understand and improve the shortcomings in services. Fourth Party Logistics will research and develop performance indicators, and through cooperation to solve problems and provide measurement methods and abnormal reports, make suppliers and transportation performance timely, complete and accurate. The whole process is planned in advance rather than reacted afterwards.

Fourth-party logistics with practical experience in Asia can provide customers with methods to control their inbound supply chain. This business process outsourcing company will provide various customers with technology, personnel and processes to manage orders, suppliers and transport. Instead of having customers passively accept off-the-shelf products, they can plan the most suitable relationships and processes for their customers.

Carriers and third-party logistics can provide online portals to track shipments. The portal is really good, but requires the shipper to know the container number or packing list number. The shipper must manage the order, must know what is being tracked, and its status and process. The logistics or source customer does not want to process the container or packing list number. In addition, the handling of containers is a follow-up, the result of managing orders and suppliers, the result, not the cause.

Things like portals don't meet the special needs of customers, they meet the needs of carriers or third-party logistics. Carriers or forwarders are concerned about transportation, which is cargo containers. Loading, fulfilling service contracts, and maximizing profits are the ultimate goals of carriers and forwarders, and these things do not help customers manage their orders, which provides 4PL with an unmet customer demand.

This international supply chain service provider has powerful information technology tools, namely an online, professional order management system, which can be used to fill orders online and transfer them to suppliers. The order will include detailed information such as parts, color, size, model, packaging, and various other product descriptions. The order system will provide multi-language screens for suppliers. Related suppliers can use the online system for updates, modifications and other operations. All work is done through the system, rather than decentralized processes through scattered emails, spreadsheets, etc method. With ready-made ERP, WMS and other systems, the IT of Fourth Party Logistics can collaborate with various technologies, so that the trading partners of all parties can be connected and integrated with each other. Data can be exchanged in many ways, including direct input, Internet interface, EDI, XML, and flat files.

Leading logistics providers can also have logistics personnel in Asia who are in the same time zone as the customer's supplier and speak the same language. They will work to make the supplier aware of the customer's requirements for shipping, transportation and the supply chain. Efforts will be made to enable suppliers to meet the special needs of each customer in a timely manner. This has both online connectivity and Asian personnel, and complete performance.

This international logistics business process outsourcing company will work with marine carriers, mixed carriers, forwarders, and cargo third-party logistics companies or customers. Customers do not have to change carriers or forwarders in order to use the resources and services of a fourth party logistics company. This is the main difference between fourth-party logistics and third-party logistics. Business process outsourcing logistics service providers will manage the entire Asian inland supply chain, including transportation companies used by companies. This is a fourth-party logistics tailor-made solution that manages and strives to achieve some of the capabilities required by each customer.

Similarly, the fourth party logistics will give customers a visual operation of the purchase order and even the detailed status of the project. When the ordering process enters the loading and shipping phase, the online information will be updated for the customer. Customers can track cargo shipments, and online tracking capabilities include EDI updates as containers travel from US ports to their final destination.

New international logistics providers have developed and provided methods for managing orders, inventory, suppliers, freight transportation and international logistics. By using information technology and local logistics staff in Asia, Fourth Party Logistics has the only way to manage Asia's inland supply chains. This approach creates true shareholder value and creates expected profits for customers of Fourth Party Logistics. It will need to be translated into a solution. Compared with the third-party logistics that meets the needs of the parent company, the fourth-party logistics truly meets the needs of customers.

Business process outsourcing conclusions

Some third-party logistics providers have not yet fully entered the stage of meeting the exact needs of customers. Some third-party logistics providers have become too focused on "management" tasks, not processes, and too focused on the core business of the parent company, missing out on opportunities to provide value. As a result, fourth-party logistics providers have become substitutes for business outsourcing. These new business process outsourcing logistics service providers can enable enterprises to realize the management of the core part of the supply chain by achieving visualization and resource integration across multiple enterprises. They seek to manage the three main elements of process, people and technology. Users of fourth-party logistics can better focus on the core capabilities of the enterprise, better manage and use corporate assets and resources, as well as inventory and personnel, and make better use of what fourth-party logistics can do.