Introduction
Any modern organization, regardless of industry and field of activity, uses a particular business model for its functioning. It can be identified and deduced according to established theories, or it can be formed according to the decisions made by the leadership. One way or another, using a business model or having an understanding of how specific processes should be implemented not only allows achieving more effective results but also to make more accurate forecasts. However, although there are many approaches to this process, there are no universal quality standards. Therefore, in each case, the decision to use a particular tool is made following the goals and benefits.
In general, the industry has recently shifted significantly towards using various IT services that automate processes and process complex business data, building forecasts using mathematical calculations. In recent years, artificial intelligence and machine learning have become the most common technologies. However, most companies cannot afford such solutions, despite all their business appeal. In this case, such a phenomenon as outsourcing comes to the rescue, reducing costs and increasing production efficiency. Using the services of professional firms, companies can direct their resources to the most profitable areas of activity. This essay aims to reflect on the work done to improve business efficiency through the use of outsourcing and to correlate the decisions made with the business quality and outsourcing model.
Situation Overview
In my current workplace, I had the opportunity to improve business efficiency by introducing specific innovations and changing the procedures. Although the company had an established order, there was room for improvement and new technologies. Reducing procedural complexity is one of the main factors in increasing production efficiency. If the workflow is loaded with the need to perform a large number of different actions or process a large amount of information, the efficiency of the entire business will inevitably suffer. While these words are valid for both customer service and the supplier side, I focused on the latter area in my project, aiming at improving performance and increasing efficiency.
In the existing order of work, I noticed several weak points at once. First of all, it should be noted that the company works with 26 contractors at once; however, this process was carried out exceptionally ineffectively. The call center had to manually call each of the contractors to get the necessary information from them. In addition, purchase orders were generated separately for each machine repair, resulting in approximately 1,200 purchase invoices per month. They also had to be processed manually, recalculating all the available parameters. Finally, all 26 suppliers worked at different rates and had different hourly wages.
In such an environment, forecasting, flexible market expansion, or market expansion have been difficult. Many factors did not depend on each other and were not connected into a single system, which led to the need for thorough manual data processing. Having noticed this given problem, I decided to use an outsourcing company to automate the existing processes. Such a company, ABC ELECTRICAL, was supposed to become a link between all contractors and the parent company itself. At the same time, the company’s clients should not have noticed any changes in their work, i.e., the measures being implemented were not supposed to affect customer service in any way. However, according to the existing plan, the introduction of such efforts should significantly increase the efficiency of current labor and create prospects for further development of the company.
Business Quality Model
There are several basic models for assessing the quality of a business, following which one can build a business methodology. The variety of existing models is due to the presence of industries that require a specific approach. This is why there is, for example, ISO 14001, which is the international standard for environmental management systems (Murray & Murray, n.d.). However, since the company under study is quite common and there is no need for specialized approaches, the widely used ISO 9001 standard is suitable as a model for assessing the quality of a business.
This model has a long history and was initially formed in the engineering field to assess the quality of work. The current version of this standard has been revised and shaped to meet the needs of most service companies (Murray & Murray, n.d.). Despite some criticism, implementing such a standard allows for the establishment of strict discipline and consistency in work by covering the eight basic principles of management. According to the paper, these are customer focus, leadership, people engagement, process approach, improvement, evidence-based decision making, and relationship management (ISO, 2015). The same principles are presented as a diagram in Figure 1 (“What is the ISO 9000 standards series?” n.d.).
The work I have done in many ways fits into the principles outlined above, although not completely. First of all, most clearly, my actions fit into the principles of approach to management from the point of view of processes and the management of relationships. I considered the activities taking place in the company as processes connected with the correct use of resources. Instead of having many disparate activities, I have formed a system in which these processes dock, communicate and become more straightforward.
At the same time, elements of relationship management were introduced, as it became necessary to identify contractors and suppliers, establish the right relationships and collaborations between them with the help of an intermediary in the form of an outsourcing company (“What is the ISO 9000 standards series?” n.d.). In general, it can be noted that my actions were aimed at organizing a system that eliminates difficulties in the current business and increases its efficiency. In addition, the plan was fully implemented only after testing on the southern island with 13 contractors, which fits into the evidence-based approach (ISO, 2015). However, not all of the principles of the standard could be applied in this context.
First of all, since the focus of the project was on the customers, and the client-side of the business was excluded from the calculations, it was impossible to address the requirements and wishes of the client-side directly. The project was designed so that the work of the company does not change from the point of view of the clients. It is possible that improving the efficiency of internal work will positively affect the quality of service delivery; however, such a task was not on the list of goals.
In addition, leadership is also weakly applicable to this project since its implementation was carried out by a person who does not have much influence on the company (“What is the ISO 9000 standards series?” n.d.). It is also difficult to talk about the engagement of people since the process is automated. Thus, of the seven factors of this model, three are not taken into account due to the specifics of implementation and real-life operational complexities.
However, by applying this model to my actions and analyzing the company’s work through the lens of ISO 9001, I received a lot of new information. Studying this model allowed me to identify the key points to pay attention to when improving the company’s quality. In addition, I drew attention to the fact that the standards do not always correspond to reality, and non-compliance with some points is normal, especially given the presence of a large number of measures. However, the ISO 9001 model showed me how to organize work effectively, based on discipline, involvement of all parties and strict order.
Outsourcing Model
Outsourcing is becoming more and more popular due to the proliferation of modern technologies. The same factor determines the fact that outsourcing companies are the most popular in the IT field. However, this does not mean that this method of work cannot be applied within other industries. As practice shows, organizing your team to solve a problem makes sense in cases where the company has enough resources, independence is critical, and also when the company can attract high-quality specialists (Maria, 2021). In all other cases, outsourcing companies can be used, which can be built according to one of many principles.
Despite the wide variety of solutions, they all boil down to three variables: location, relationship, and price. To solve the company’s problems, I chose ABC ELECTRICAL, a fixed-price onshore outsourcing company. The first factor is essential to ensure stable communication between all participants in this system. Since ABC ELECTRICAL had to contact 26 contractors in sufficient proximity to the leading company, offshore outsourcing options were swept aside immediately.
The presence of a time difference and a language barrier would only complicate universal communication, thereby undermining the primary goal of the project – to reduce the complexity of interaction between the company and contractors (Cruz, 2020). Fixed prices also allow for greater ultimate efficiency since the fixed price model was applied to all partners, including the 26 mentioned contractors. Thus, the establishment of fixed, rather than floating, tariffs has a positive effect on budget planning and forecasting conditions.
Although more flexible pricing schemes are used in outsourcing, such an approach has a right to exist in the current realities. Models based on shared risks or incentives imply more flexible work, which is why they are so often used in various kinds of IT projects (Maria, 2021). On the other hand, the task set for ABC ELECTRICAL is long-term and stable since the company must receive information from contractors on an ongoing basis and redirect it in the collected form to the leading company. A separate dedicated team is needed for this, working according to the scheme presented in Figure 2 (Maria, 2021).
Such a structure provides several advantages at once, the key ones of reducing the time for data processing, improving communication and increasing control over the entire process. Since these factors were critical to the project, this particular model was chosen. However, there are also certain discrepancies between theory and practice, dictated by the specifics of the industry. In the IT sphere, for which most of the outsourcing models are created, the work is often project-based. It is for the project that a team of specialists is assembled inside or outside the organization. In this context, the work is not project-based but permanent; therefore, perhaps, the word “outsourcing” in its most usual sense does not quite accurately describe the nature of the relationship between the leading company and ABC ELECTRICAL.
Instead of flexible work on a common task, partnerships were established, and part of the tasks of the leading company was redirected to ABC ELECTRICAL. Nevertheless, despite the specifics of the implementation of this outsourcing project, it still satisfies all the tasks set. In addition, studying the mechanisms of outsourcing has allowed me to understand better how the company’s work can be divided and implemented more efficiently.
Conclusion
Thus, I can conclude that I have successfully applied the company’s quality management model and outsourcing model in this project to increase work efficiency. Although the implementation of both approaches was associated with specific difficulties due to the discrepancy between theory and real conditions, executed decisions made it possible to achieve particular successes for the company. In particular, the number of processed documents was reduced by delegating the authority to collect purchase orders to a separate company, and a fixed price was established for all contractors. These two factors greatly simplify business management, allowing forecasting and managing this business more efficiently. In addition, it became possible to optimize and improve the company, for example, by expanding the network of contractors, which was impossible given the existing load on the company’s call center.
In a personal context, throughout this project, I gained more confidence in my business practice, strengthened my ability to express my ideas and communicate them effectively to senior management. Communication skills were essential for this project, so implementing the task at hand allowed me to improve them significantly. Finally, studying various business models allowed me to expand my knowledge of increasing the company’s efficiency, which will be helpful in the implementation of future projects.
References
Cruz, M. K. (2020). Understanding the different types of outsourcing models. D&V Philippines. Web.
ISO. (2015). Quality management principles. Web.
Maria, D. (2021). 3 types of it outsourcing models and how to choose between them. Cleveroad. Web.
Murray, R. & Murray, W. (n.d.). The main quality models. P100 Assistant. Web.
What is the ISO 9000 standards series?. (n.d.). ASQ. Web.