Outsourcing in the forestry industry in South Africa: a study of the indicators for long-term sustainability

Abstract

The business environment is changing globally more rapidly than most individuals and organisations are willing to accept or are prepared to anticipate. The forestry industry itself is faced with various changes in the political, economical and social environment. Change is marked by the globalisation of timber markets, new technology, reformed political regulations and changing values in rural societies. Initially outsourcing was all about costs - finding someone who could do the same job, better, faster, cheaper or all three. Outsourcing then became strategic - the focus encompassing the even larger opportunity costs savings that come when an organisation reinvests the freed resources back into even higher value producing processing capabilities. Management is currently looking at their outsourcing partners to do all these things and to become sources of innovation - helping them to create new ways of doing business. However, companies often do not choose outsourcing partners with any degree of science or structure and then they fail to appreciate that business is dynamic. The deal negotiated today will probably be obsolete before pen is put to paper. Outsourcing initiatives require governance and ongoing management to ensure success. Governance ensures that the partners understand the what, when and how of the outsourcing agreement, as well as the roles and responsibilities of each partner. Ongoing management ensures cost savings don't just come from labour arbitrage but from improved productivity as well. Outsourcing does not remove the principle companies need to manage the process. A comprehensive outsourcing arrangement requires monitoring and redefining as well as strategic management and other retained functions. Every time an organisation outsources successfully, it lowers its costs, improves its balance sheet, reduces its business risks, and expands its capabilities. If outsourcing is to continue to grow over the next ten years and to be sustainable then organisations will have to produce better results with greater regularity and at lower costs. Doing this will take a collaborative effort from all the stakeholders. This research document will explore the presence of indicators for sustainable outsourcing. The approach will be to deal with both the 'hard' management tools and processes which should be uitilised and the 'softer' issues of what should be being communicated and the personal styles and attributes required to achieve outstanding sustainable results