Road to resilience

Many companies are facing a persistent risk of disruption and bringing supply chains closer to home. They’re also considering strategic shoring to increase agility and stability.

This shoring conversation may also include another part of some supply chains: managed services. To balance cost, collaboration, and impact, companies are considering the location of critical services like cybersecurity, applications management, and compliance.

Indeed, according to the KPMG and HFS Research Managed Services Outlook Survey, more than 70 percent of buyers prefer to have onshore delivery centers as part of their managed services mix. Leading providers are answering the call, with options ranging from onshore, nearshore, and offshore to hybrid models such as co-sourcing or even joint ventures. 

Location concerns often relate to people as well as data. Amid geopolitical uncertainty and regulatory change, data residency and privacy are becoming pain points in sourcing.

Managed services providers are responding. In cybersecurity, for example, some providers of managed detection and response offer a multi-tenant architecture in the cloud. That means, instead of moving data to another location for monitoring, providers work in a client’s tenant, with all data remaining onshore in the client’s environment — and in compliance with local data regulations.

Another risk-mitigation factor in shoring decisions is speed, as many companies choose supply chain locations that can shorten lead times and get products to market faster.  

Similarly, respondents in the Managed Services Outlook said their No. 1 goal with managed services is faster speed to market for new products and services. Furthermore, 70 percent of buyers say the model exceeds expectations in this area — whether it’s improving compliance processes to onboard customers more quickly or accelerating the adoption of new tech.

But speed is often at odds with cost, since some companies still treat labor arbitrage as the top driver in decisions about supply chain and sourcing. A better approach is to balance costs with other benefits. An effective managed services model, for example, can significantly reduce the cost of operations through advanced technology and processes, but it should also prioritize other outcomes such as rapid innovation, resilience, and customer retention.

On the road to supply chain and sourcing resilience, companies must find the right balance between cost, flexibility, and strategic impact. 

For an archive of past blogs, please visit Going Beyond: Managed Services.