Cost pressures are preventing insourcing
One response to the increased risk sensitivity of outsourcing is clearly to consider insourcing those business processes and activities most critical to the business.
While a closer operational relationship will address business risks? The operational challenges of sourcing the right skills and experience locally, as well as the time and budget to build a replacement infrastructure, mean that insourcing processes and services beyond a small number is very challenging, if not impossible. The increase in costs, as well as the challenge of passing these costs onto the customer make significant insourcing impractical.
This picture was not uniform. Telecom companies were the most reluctant to consider insourcing, while financial services (driven in part by enhanced regulatory scrutiny) were more likely, as was the public sector.
Enterprise-strength Third-Party Risk Management
The insights from the Deloitte research are similar to the feedback we’ve been getting from our own customers. From our perspective, companies are looking to significantly enhance their TPRM capabilities, both to streamline their current operations but also to embrace new capabilities that can enhance the overall effectiveness of their TPRM efforts.
Real-time risk intelligence is proving to be of great interest, so that companies can understand where the next issue may emerge, whether it be for operational, technical, commercial, or contractual reasons. Similarly, toolsets that allow procurement and operational teams to proactively monitor the supply chain, down to their 4th and 5th levels, can provide valuable insight in ensuring performance against contract and specification.
There is a need for TPRM solutions that are easy to use and deploy, and that impose minimal overhead on the supply chain, while still providing enhanced visibility for both sides.