Cultural fit should be top criterion for choosing an outsourcing partner
By Staff -- Manufacturing Business Technology, 8/1/2006 12:00:00 AM
Russell Stover is a household name in the candy business. In fact, the three brands made by the Kansas City, Mo.-based company—Russell Stover, Whitman's, and Pangburn's—account for 60 percent of all boxed chocolates sold in the U.S.
But when Russell Stover decided to outsource its IT operations, it learned that name brands aren't always the best choice. "Dreadful" is how Russell Stover VP Dick Masinton described the experience of working with a well-known outsourcing firm he declined to name. "Anything that could go wrong, did," he says.
Many problems were serious, such as frequent network failures, and an inability to process invoices or close the quarterly books in a timely fashion. And if that wasn't enough, Masinton recalls, "Every time we called them about a problem, they'd refer to the contract to see if our request was within the scope."
Starting over with OneNeck
After a new outsourcing partner search, Russell Stover signed an agreement in July 1999, under which OneNeck IT Services would manage the candy maker's Baan ERP system. In August 2005, OneNeck began managing the JDA Software demand-chain solution that Russell Stover adopted to support expansion of its retail business. And this past June, the company inked a new four-year deal to have OneNeck manage its IT functions, including support for Windows-based servers and desktops.
"Our latest contract renewal and nearly seven-year partnership with OneNeck speak for themselves," says Masinton. "The OneNeck team excels in managing our enterprise systems and, as a result, we awarded them the final pieces of our information technology requirements."
Russell Stover's own story doesn't mean companies should rule out large providers when choosing an IT outsourcing partner, but it does mean they should look for one that understands—and is responsive to—their particular needs, regardless of size.
Masinton says its original outsourcing firm was a poor match from the start because it didn't understand Russell Stover's business, which combines process manufacturing in candy production with discrete production in packaging the product. That lack of knowledge led to multiple problems, including a poorly designed interface between the ERP and warehouse management systems.
OneNeck made a good first impression by rebuilding that interface and enabling smooth transition of the ERP system over to its operations center in Arizona. More important, Masinton says, OneNeck's staff didn't continually refer to the 72-page contract when problems arose.
"Our people are instructed never to discuss the contract with the customer," says OneNeck CEO Chuck Vermillion. "We fix the problem first, and deal with the contract later. We'll provide the service within the regular fee structure, without charging extra, whenever we can."
Encountering Freeborders
A willingness to put customer needs first also cemented the relationship between Freeborders, an outsourcing firm specializing in multicountry engagements, and Wichita, Kan.-based Invista, which makes resins and fabrics such as Lycra and nylon.
Invista first encountered Freeborders in 2001, when the company wanted to launch a Web portal through which apparel manufacturers could quickly locate and place orders for fabric from any manufacturer, not just Invista. When it became clear that Invista's in-house IT staff could not build the portal in time for its scheduled launch at a major trade show in Paris, bids for the job were sent to outsourcing firms.
Freeborders was not the winning bidder, but that didn't stop it from courting Invista.
"I knew we had the best value proposition to deliver the portal by the deadline," says Mike Keating, a Freeborders project leader. "We worked flat-out for two weeks for free and showed them a prototype."
Freeborders literally worked around the clock, and around the world. While its headquarters is in San Francisco, Keating is based in North Carolina, and he directed team members in the U.K., China, and Switzerland. Ultimately, that effort won Freeborders the contract.
"I liked their can-do approach," says Norman Beveridge, Invista's global apparel manager. "They completed the project about three weeks ahead of schedule, only because of their willingness to work at both ends of the day."
The portal's official launch at the Paris trade show was a success, and it has since become a profit center for Invista, with fabric vendors paying to list their products. And Freeborders still handles the portal's upkeep.
Connecting the dots
While both IT and industry knowledge were crucial to these relationships taking off, their long-term success is probably due more to what industry experts often refer to as cultural fit.
"Russell Stover is an old-fashioned company with an old-fashioned work ethic," says Masinton. "We value hard work, quality, and long-term relationships with suppliers. I think OneNeck shares those values."
Meanwhile, Invista and Freeborders have opposite personalities that complement one another perfectly. Invista, once a unit of DuPont and now owned by Koch Industries, is a large, well-established, conservative company. Freeborders, founded in 1997, embodies the fast-moving, passionate ethos of a young company. "Ours is a culture of burning desire for success," says Keating. "Conservative companies love the infusion of energy and enthusiasm we bring."
Featured Company
Most Recent Resources
- FICO™ Xpress Optimization Suite Schedules Big Profits For Clients
- Strategic Pricing: Three Steps to Higher Profit Margins
- Driving Innovation Through Lean Product Development Practices
- Demand Planning Maturity Model Strategies for Demand-Driven...
- Simulation-Driven Product Development:Will Form Finally Follow...
