William Gindlesperger, Chief Executive Officer of e-LYNXX Corporation
Outsourcing can provide food manufacturers with many competitive advantages, including cost reduction, quality enhancement and reduced risk. Food Manufacturing spoke with William Gindlesperger, CEO of e-LYNXX Corporation, about how the food industry can maximize the benefits of outsourcing while reducing any negative effects.
Q: What are some of the best tasks for food manufacturers to outsource?
A: From our perspective as procurement experts, we think anything that is not a core competency of the food manufacturer should be a candidate for outsourcing. Good examples of this include marketing materials, direct mail, labels, packaging and corrugated.
Q: What is the difference between outsourcing and a strategic partnership?
A: Outsourcing is about procuring something that is not produced in-house, while a strategic partnership is a form of outsourcing that implies single or sole sourcing. Strategic partnerships are normally good for the seller and convenient, but very costly, for the buyer. Strategic partnerships rely on the seller to offer services such as specification development and expertise not available in-house for which the price can be set through a request for proposal or a negotiated process. Unfortunately, these kinds of arrangements do not take advantage of downtime opportunities available at any given time among a qualified pool of vendors. It is through a controlled process of consistently competing transactions or groups of transactions that savings are optimized. Often these savings exceed 40 percent when compared to the strategic partnership form of outsourcing.
Q: What are the benefits of outsourcing for food manufacturers?
A: The primary benefit is the manufacturer does not have to go to the internal expense of trying to develop the expertise and capabilities of producing work that others can do better and for a lower cost. When an organization tries to do everything in-house, the core competencies suffer. A top-quality vendor can produce labels, for instance, for a fraction of what it costs a food manufacturer to gear up and operate an internal print operation when all of the costs are considered. Additionally, with outsourcing comes competitive advantages, outside expertise, cost reductions, quality enhancements, reduced risks, avoidance of staffing issues and establishment of vendor contractual obligations.
Q: Are there any negatives to outsourcing work?
A: Yes, disadvantages abound when buyers do not follow professional procurement procedures. These include having a tightly written set of contractual terms and conditions, properly written specifications, objectively qualified vendors, hard and fast rules for quality and delivery compliance and more. Internal users, like marketing, need to be in charge of creative specifications, quality and delivery requirements; staff buyers need to be responsible for competitive procurement among qualified vendors, invoice approvals and other administrative duties; and higher level financial staff need to require optimum cost savings, thus wringing every penny’s worth of value out of every dollar spent.
Q: What does your company do to help manufacturers experience the benefits of outsourcing without its negative aspects?
A: e-LYNXX Corporation offers a procurement technology that, when combined with sensible business practices and its workflow and communication system, allows clients to meet goals, including improved process control, full transparency and reporting, streamlined workflow and communication, enhanced quality and service and a significant cost reduction (25 percent guaranteed and 42 percent historical average).
e-LYNXX is vendor neutral and works to properly qualify its clients’ own vendors, write specifications, prepare templates for repeated orders, offer expertise as requested, provide a customized workflow and communication system and build a controlled competitive bidding environment in which the clients’ own vendors compete.
The competitive environment is enhanced by the elimination of price precedent. Vendors normally price work based on how much the buyer is willing to pay. If vendors price too high, buyers shy away from dealing with them. If vendors price too low, then buyers want to hold vendors to the prior price. By eliminating price precedent, vendors can base their pricing less on what they perceive the buyer is willing to pay and more on the instant need to fill their production gaps or downtime.
Q: How can food manufacturers best utilize outsourcing?
A: Food manufacturers would be well served to embrace new procurement ideas and technology, rather than maintaining the inertia of traditional approaches that rely heavily on strategic partnerships and negotiated pricing. In short, to outsource or not to outsource is not the question. Rather, business is all about reaching and exceeding profit goals, and optimizing outsourcing can be a huge opportunity.
e-LYNXX Corporation developed the patented technology integral to e-commerce. Endorsed by Educational & Institutional Cooperative Purchasing and Printing Industries of America, e-LYNXX drives results through its three divisions. Patented Procurement Method licenses the Automated Vendor Selection Technology (AVS TechnologyTM) used in e-commerce and procurement systems. American Print Management provides systems, services and the patented AVS TechnologyTM to reduce substantially the procured costs of direct mail, marketing materials, labels, packaging and other procured print. Government Print Management offers effective U.S. GPO bid services and strategies. For more information, visit www.e-LYNXX.com or call (888) 876-5432.
