Last week, we offered some perspective on the role of supply chain in flattening the global marketplace, thoughts triggered by Thomas Friedman’s excellent new book, “The World is Flat.”
I think the impact of offshoring and outsourcing has the potential to impact supply chain and logistics professionals even further.
Of course, we’ve been “outsourcing” logistics functions, especially on a global basis, long before outsourcing generally reached the “mega-trend” status it has now.
But Friedman’s book describes how the scope of knowledge jobs being outsourced, especially to India but other countries as well, is broader and deeper than I realized, with no signs of slowing down. In summary, your job could be next.
For example, we all know about call centers and IT operations being outsourced to India, but did you know if you use a third-party tax preparation service, it is likely that the actual work on your return is being performed by an accountant in India? (As an aside, this involves very sophisticated technology that enables the Indian accountant to work on your return and information while keeping the individuals’ identity and other information blocked, to manage privacy concerns and some U.S. laws.). That’s just one example; you can add doctors reading U.S. CAT scans in India, Boeing aerospace engineers in Russia, computer engineers in Taiwan, etc.
Friedman writes, “No matter what your profession – doctor, lawyer, architect, accountant – if you are an American, you better be good at the touchy-feely stuff, because anything that can be digitized can be outsourced to either the smartest or the cheapest producer, or both.”
It was the “anything that can be digitized” comment that started me thinking. Inventory data is readily available in digital form – might not inventory planning functions be outsourced? Ditto for demand planning and forecasting. And getting really wild, is there any real reason – with today’s high speed communications and even video connectivity – that wave planning in a distribution center couldn’t be done by a bright young person in India? Especially for 24 x 7 operations that have a hard time staffing that position on off-shifts?
Think about it – why won’t someone start “Demand Planners Inc.“ in Bangalore, staffed with a bunch of brilliant forecasters with PhD’s that speak English impeccably?
I know Manugistics at least for awhile offered a “rent a planner” service, but I don’t think it ever took off. Maybe it was ahead of its time. Maybe it only has appeal if the cost is one-fifth of that in the U.S. or Western Europe, as India is.
Whether it is inventory planning or wave management, there is of course a lot about the company, its history, way of doing business, etc. that goes into performing the job. But this insight can be learned as well. The good news is there is still a lot of interaction with internal and external customers with most of these functions, providing a barrier to outsourcing. But part of me still wonders whether the U.S. managers and execs going in to the sales and operations planning meeting might not soon be backed in some cases by forecast data prepared by someone in India.
Don’t shoot the messenger – I’m just pondering what could happen after reading Friedman’s book and connecting some dots. It’s something supply chain execs may be forced to consider at some point; all the “do-ers” need to ensure they are adding enough value –in especially in interpersonal interaction and teamwork – that the prospect of cutting costs for your job by 70% or more still are unappealing.
In a flat world, all of us need to be on the lookout for competition we never saw coming.
o you believe traditional supply chain jobs in planning and execution could be outsourced to lower cost countries? What would be the barriers? What should SCM professionals do to minimize the chance that their job goes to India?
Let us know your thoughts.
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