analyzing the outsourcing trends

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  • 8/3/2019 Analyzing the Outsourcing Trends

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    The first Industry identified to analyze the outsourcing trends of last 10 years is Dabur. The

    company is the fourth-largest consumer packaged goods company in India, offering a wide

    range of health care, personal care and food products to customers in more than 50 countries.

    Dabur is also the worlds largest manufacturer of Ayurvedic medicines, which are based on

    an ancient Indian system of health care and promote natural and holistic living. The company

    reported 2007 revenues of more than US$543 million.

    The outsourcing trends ofDABUR India Pvt. Ltd. can be analyzed by extracting the datas

    from last five years pertaining to the raw materials consumed and the cost of sales.

    Hence the outsourcing ratio can be obtained from both the figures.

    The data pertaining to the raw materials consumed and the cost of sales from the year 2001 to

    the year 2010 are summarized in the following table:

    COST OF RAW

    MATERIALS

    COST OF SALES OUTSOURCING

    RATIO (RM/CS)

    2001 53847.27 33972.71 1.58

    2002 51561.04 36457.17 1.41

    2003 57756.71 42065.81 1.37

    2004 58146.81 39726.00 1.46

    2005 65942.25 47691.25 1.38

    2006 80772.30 56522.85 1.43

    2007 97108.28 48138.98 2.02

    2008 110097.35 56568.46 1.94

    2009 137617.00 62493.00 2.20

    2010 155074.00 82220.00 1.88

    Keeping in view the value chain of Dabur, the company has shown a certain degree of

    sustainability and consistency in terms of its outsourcing trends. The ratio remained

    consistent from the year 2001 till 2006, hovering around 1.5; however from the year 2007

    onwards there was an increase in the outsourcing ratio component giving light to the fact that

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    even Dabur joined the bandwagon on emphasizing more on the outsourcing noncore activities

    for efficient supply chain management.

    Dabur India Ltd. realized it needed to perform better and make faster decisions in order to

    outpace its peers in revenue and profitability growth. To meet its goals, Accenture proposed

    that Dabur improve its supply chain management, sales and distribution capabilities and use

    IT as a strategic enabler for its business strategy. This included migration to a nimbler

    outsourcing model that would generate value through agility and support business initiatives

    and maintenance of its SAP ERP system.

    Apart from the above mentioned fact even Accenture helped Dabur by implementing a new

    sales and distribution strategy, supply chain management capability, optimizing ERP

    capabilities and outsourcing IT operations.Dabur is showcasing itself as a high-performance business relentlessly pursuing operational

    excellence in a number of ways, including:

    I. Competing on core competencies, while outsourcing non-core functions to trustedthird-party providers.

    II. Viewing information technology (IT) as a strategic asset that creates real valuesnotsimply a cost to be managed.

    III. Streamlining processes wherever possible.