Supply Chain Management (SCM) BPO - Beyond Procurement Outsourcing (PO)

1 Mar 2013



Traditionally, outsourcing of supply chain functions has been focused on sourcing and procurement of indirect goods and services. However, as the PO market continues to mature, organizations are beginning to realize the potential benefits of outsourcing other supply chain functions such as order management and fulfillment, logistics, inventory management, returns management, and master data management.

This study goes beyond PO to explore buyer adoption and solution characteristics in other supply chain areas and profiles the capabilities of several SCM BPO service providers.

In this study, we analyze the SCM BPO market across various dimensions:

  • Market overview and key business drivers
  • Buyer adoption trends and solution characteristics
  • Service provider profiles

Supply chain planning

Scope of the study and sources of information

  • The scope of this report is third-party SCM BPO and does not include coverage of shared services / Global In-house Centers (GICs)
  • Key exclusions
    • Outsourcing of sourcing and procurement processes: Covered separately under Everest Group’s PO offering
    • Outsourcing of manufacturing processes: Primarily associated with contract manufacturing and are not classified as BPO services
    • Outsourcing of logistics and warehousing operation to third-party logistics and warehousing service providers

Market maturity of BPO segments


With increasing complexity in supply chain operations, the value proposition of outsourcing SCM processes is expanding beyond cost reduction, as it can lead to creation of favorable business outcomes around activities such as inventory management, efficient cash flow management, and customer/vendor experience. This report analyzes the key trends in SCM BPO. It provides an understanding of the market growth, business value, adoption trends, and solution characteristics of SCM BPO. The report also profiles five BPO service providers with robust SCM BPO capabilities. Some of the findings in this report are:

  • SCM BPO witnessed a growth of over 10% during 2009-2011
  • Given strong linkages to overall product life cycle, SCM BPO has a strong cost+ value proposition. It enables enterprises to address several business pain-points such as inefficient cash-flow management, delays in order-to-deliver, high inventory carrying costs, and customer dissatisfaction arising due to inefficient after-sales service
  • SCM BPO poses various unique challenges as it covers the entire product life cycle. These include cross-functional dependencies, fragmented technology landscape, direct exposure to the end customer, and lack of a mature service provider landscape
  • Adoption of SCM BPO is higher in organizations where the supply chain is defined around “product” life cycle as compared to “services” life cycle
  • Offshoring is high in SCM BPO. Onshore/nearshore presence exists primarily to provide language and voice support
  • Augmentation of existing technology landscape leveraging delivery/process/functional enablers is the predominant SCM BPO technology model
  • The service provider landscape for SCM BPO can be divided into BPO providers and logistics specialists

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