Outsourcing of Activities in a Sales Company

Subject:         Outsourcing in Schneider Electric Bulgaria

Department:        BAED

Module code:        EMBA212

Cohort:        15a

Module title:        Business strategy

Student name:        Vasil Takev

Reg. No.:        EX27199

Date:        02.06.2009

EXECUTIVE SUMMARY

Purpose – the recent report has the aim to describe and analyze possible outsourcing strategies in Schneider Electric Bulgaria. The paperwork is defining why there is a need to outsource, which business process in the company is better to be outsourced and give general recommendations about implementing the process.  

Approach – review of the literature; analysis of the business environment; analysis of the variants for outsourcing.

Findings – considering the business environment, it is evaluated in the report that possibilities for outsourcing are Customer Care Centre (CCC), including Logistics or Car Fleet Manager. Based on the importance of both process as part of actions, crucial for company’s results, it is taken a decision to outsource CCC.

In the report are made general recommendation how the company has to handle the outsourcing, giving general guidelines about the important elements and players in the stages of the outsourcing – planning, definition of needs, tender preparation, evaluation of the bids and management and control of the outsourcing contract.

Table of content

INTRODUCTION TO SCHNEIDER ELECTRIC BULGARIA        4

DESCRIPTION OF THE COMPANY        4

STRUCTURE OF THE COMPANY AND BUSINESS MODEL        4

LITERATURE REVIEW        5

ENVIRONMENTAL ANALYSIS        12

EXTERNAL ENVIRONMENT        12

INTERNAL ENVIRONMENT        14

OUTSOURCING STRATEGY        15

VARIANT 1: OUTSOURCING OF CUSTOMER CARE CENTER        16

VARIANT 2: OUTSOURCING OF CAR FLEET MANAGER        18

FINAL CHOICE AND ACTION PLAN        18

CONCLUSIONS        24

REFERENCES        25

Appendix 1: Structure of Schneider Electric Bulgaria and business model        27

Appendix 2: Five forces analysis        29

 INTRODUCTION TO SCHNEIDER ELECTRIC BULGARIA

The aim of this paperwork is to define possible outsourcing strategies in Schneider Electric Bulgaria. Further will be described:

• The described in the literature outsourcing strategies
• Description of the company
• Characteristics of the business environment
• Strategies for outsourcing of customer care center and IT department
• Choice between above mentioned two options

DESCRIPTION OF THE COMPANY

Schneider Electric is an international company, among the worldwide leaders in manufacturing and sales of products, solutions and services in the field of power distribution, automation and energy management. Schneider Electric Bulgaria (SEBG) is the local branch of Schneider Electric (SE). The company core activities are related to business-to-business (B2B) sales of automation, control and electrical distribution products, solutions and services to following markets: energy; infrastructure; industry; buildings; telecommunication. In the services field SEBG is providing such as designing, commissioning, project management, installation audits, consulting etc.

Following the mother company regulations the company is active only in the local (Bulgarian) market. For some cross-border projects SEBG is providing also services to other Schneider Electric entities in neighboring countries.

STRUCTURE OF THE COMPANY AND BUSINESS MODEL

In order to define the necessity, benefits and risks of the outsourcing possibilities, it is necessary to make an overview about structure and business model of the. Schneider Electric Bulgaria’s structure is shown in Appendix 1. On the organigram is not given the car fleet manager, who is taking care for servicing of the company cars, relations with the car dealers and authorized services, issuing of fuel purchasing cards, registration of new cars etc.

The Customer Care Center (CCC) is responsible for:

• transferring of orders to corporate purchasing system;
• issuing of offers to inquiries for standard products, in which customer is stating the Schneider Electric’s product references;
• tracking of deliveries and providing information to customers about their orders;
• issuing of invoices, packing lists and declarations;
• providing basic technical consultation to customers;
• recording into CRM system of brief reports from sales people, which are traveling in the moment.

The business model of the company comprises both direct and indirect sales, as shown also in Appendix 1.

It’s very important attention to be paid that distributors should be considered as part of the supply chain of Schneider Electric Bulgaria. When signing a contract for distribution with the company, they bear the following responsibilities:

• They use the SEBG ERP system, thus ensuring fast information exchange about deliveries, direct ordering and easy check of stock availabilities.
• Distributors have to maintain stock availability, defined according their potential and turnover
• The distributor’s stock is visible all the time for SEBG i.e. when occasions arises, SEBG employee could check in which distributor’s warehouse could be found given product and therefore to ensure that customer will have what needed on the right place at the right time (e.g. time utility and place utility).

LITERATURE REVIEW

The recent economical environment in the field of B2B sales is becoming more and more knowledge and service-based ensures many opportunities for the companies to increase their profits through outsourcing non-core activities (Quinn, 1999), (AMEGA Group, 2003). Outsourcing could bring potential cost saving, technological growth, financial flexibility and strategic enhancement. In the same time, the outsourcing process is also a risk source, for instance when outsourcing without analyzing the impact of the process on other processes in the organization. Therefore, for proper implementation of an outsourcing, the company has to follow a holistic decision making framework, which will help all the aspects of the process and its impacts to be observed as a system.