Supply Chain Management Review: Vendors Not Sufficiently Focused on Minimizing Risk, According to Consero Survey

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Supply Chain Management Review: Vendors Not Sufficiently Focused on Minimizing Risk, According to Consero Survey

Originally Published in Supply Chain Management Review | July 17, 2014 | By Patrick Burnson

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Sixty-five percent of Shared Services executives from Fortune 1000 companies do not believe their vendors are sufficiently focused on minimizing risk, according to a new survey by Consero Group.

“The Shared Services model has proven effective as a cost-reduction tool that allows organizations to focus on growth, but cost savings and efficiencies are less appealing if they lead to dangerous levels of legal or regulatory risk,” says Paul Mandell, Founder & CEO of Consero, “Reducing the risks associated with outsourced work is an area on which these executives will need to focus their attention in the months ahead.”

In addition, a total of 37 percent of Shared Services executives do not feel as though they are receiving sufficient value from their vendors.

The results were reported as part of the 2014 Shared Services & Outsourcing Data Survey, compiled by Consero Group.

“This finding is a warning to vendors who will be increasingly challenged to provide added value to their Shared Services clients,” says Mandell.

Other findings included:

  • Increasing Budgets and Staff Sizes: Nearly three-quarters (72%) of Shared Services leaders report increased budgets over last year and 66 percent increased staff size.
  • Lack of Presence in BRIC Countries: Less than half (45%) of those surveyed have a shared services presence in the BRIC (Brazil, Russia, India, China) countries.
  • Captive Structures: A captive structure is used by 53 percent of participating Shared Services leaders, while only a handful (5%) use a completely outsourced model, and a sizeable minority (42%) rely on a hybrid model of captive and outsourced centers to structure their function.

The 2014 Shared Services & Outsourcing Data Survey included 14 questions that were posed to all Shared Services executives from Fortune 1000 companies in attendance at an invitation-only event hosted by Consero Group in February 2014. A total of 58 responses were provided.

“Our survey demonstrates the increasing importance of the shared services function,” Mandell adds. “Companies generally seem to be doubling down on shared services – investing more resources in staff and budget toleverage this function further.”

However, with a limited talent pool for recruitment and other challenges, the experience of shared services executives is not likely to be an easy one in the near future, maintains Consero.