5. Explain the effectiveness of outsourcing
Outsourcing of non-core business is more cost effective. This move of outsourcing helps the organisation to manage their workforce and services properly. Outsourcing improves services delivery and good relationship between the organisation and the service provider. TransNamib currently find itself in a dilemma whereby the entity is making losses due to poor rail infrastructure and lack of rolling stock. TransNamib is financially not able to acquire additional rolling stock or upgrading of the dilapidated railway lines in the country. Mines, Importers and Exporters are knocking on TransNamib for services but the entity is not able to offer such services the current and future clients.
TransNamib together with the central government must consider outsourcing some services like railing services, rail upgrading to private investors by offering Build, Operate and Transfer model. In fact they can also agree on concession whereby the investor just recover their investment and return the infrastructure to TransNamib. Namibia is rich in natural mineral resources but our rail infrastructure cannot rail the commodities for exports to the national ports in the country due to lack of rolling stock and poor rail infrastructure. Most of the commodities are currently truck by road while the rail remains the cheapest model of transport.
The private logistic sectors are willing to assist financially as well as with equipment to materialise the desired exports. If Namibia wants to position itself as a logistic hub than serious interventions must be taken to outsource some of the TransNamib services. Africa is expected to be the fast growing nation apart from Asia in terms of trade whereby Namibia has the potential to become a logistic hub.
The benefits of outsourcing is enormous and must be promoted at all cost especially for non-core activities:
• Improved service delivery
• Cost effective services
• Better relationship
• Private sectors have easy access to funding
• Rapid decision making
Outsourcing of non-core activities is not just beneficial to the organisation but it creates sustainable job creation, job security, empowerment of suppliers, reducing monopoly and distribution profit through the supply chain. Organisation that outsource they non-core activities are well managed and has better control over the third party delivering services on the organisation behalf. They build a long term relationship which fosters trust, honesty and integrity.
6. Examples and Illustrations appropriate to the tasks
• Focus on main business – TransNamib only focus on the transport and logistics management and outsource the property, maintenance and auditing division will reduce their efforts in focussing on main activities.
• Cost and effectiveness savings – By outsourcing function like accounting, once off projects will reduced the in labour cost.
• Reduced Overheads – Through outsourcing services like engineering and other support services the overhead cost like office space, pension and medical aid contributions cost can be reduced.
• Operating Regulator – The organisation is in control of the main activities as projects like ICT upgrades are outsourced.
• Employment flexibility – Employ temporary staff or contractors for sot term projects and release them upon completion of the project for example construction of an office block.
7. Assessment of the benefits of benchmarking
In order to achieve optimum benefits the following supplier’s performance management tools in place for better monitoring and control.
• Escape supply chain danger and interruption – If the organisation is not firmly familiar with third party vendors in the chain than it is difficult to apply measures to reduce the risk of involvement.
• Guard and advance the trademark – Suppliers can easily damage company image. It is important to maintain the brand protection and robust repute in view of the clients.
• Sidestep expenses and attain savings – In managing supplier’s performance view the cost associated with the supplier influencing the overall expenditure. I case the vendor information is lacking there will be an excessive influences on expenditures which can be avoided.
• Subdivision and categorised vendors – Separate via evaluation of vendors and rank them accordingly in certain categories of the groups as per their capability to meet the required targets.
• Collaborate with suppliers – Keep close relationship and co-operation closely with suppliers to create value for your organisation. Information gained via performance measures will assist the organisation to start engagement for better of the organisation.
• Improve processes within the company – Make use of the supplier’s performance management system to standardised and automated approach for measuring tools to monitor the performance continuously and engage the supplier on lack of performance thus creating value addition to the consumer.
It is imperative to ensure when hiring suppliers to scan their organisation backgrounds make sure short listing, interviews and hiring of reputable suppliers is done to guarantee reputable suppliers are appointed for quality services, brand advancement and efficiency. Despite avoiding to compromise the risk of on time delivery and quality services continues evaluation and assessments of continues affiliation with the service providers.
TransNamib needs serious interventions whereby the central government interfere and guide the organisation to improve their service delivery and offerings by acquiring rolling stock and improvement on railway line infrastructure in order to accommodate the ever raising need of commodity transport via rail which is the cheapest and safer model of handling for export purposes. TransNamib must be given the leeway by the central government to approach private sector to partner and enter in to agreements to develop the rail infrastructure and rolling stock to support the clients with the need for exports with the cheapest mode of transport solution and increase the volume throughput via the countries national ports.
Before independence TransNamib was well managed a profitable organisation which was operating on both the rail and road to covey the cargoes to their end destination by providing excellent and trust worthily service to their customers. Rail carried 80% of the cargo and the road only 20% of the commodities but today is the opposite as TransNamib mismanagement continued after independence whereby the client lost trust in the organisation. The appointment of the new Chief Executive Officer which understands the port and transport sector, TransNamib under his leaders will excel and implement change management to adopt to the ever changing business environment.