Written by Stephanie Chan Jan, 5th 2020
Global Business Services
GBS, short for Global Business Services, is a relatively new term and service model that stemmed off from the Shared Services Model which has been around much longer. In the past few years, we have seen increasing integration between Supply Chain Processes and GBS Global Business Services for large companies due to the many benefits of centralization. Before you jump on this hype train, we want to provide you with a basic understanding of GBS services and SSO, how they relate to supply chain, and what your business supply chain process can expect to benefit from using such a service model.
What is Global Business Service and Shared Service?
The term Shared Service may be familiar to you as it is traditionally a shared service made to support back office functions such as accounts payable, IT, or any high-volume transactional processes that are easy to automate. Large companies have these types of shared region or global account shared service centers to support their back-office processes. The core ideas of Shared Service are to centralize, automate and standardize processes.
Centralization – capitalize on economies of scale
Automation – Deliver savings and increase scale using new technologies
Standardization – Improve process through standardization to achieve the ultimate goal of cost saving
Global Business Service
GBS is basically a more integrated and advanced version of the shared services model that evolved from new demands. It is truly global, unlike shared services which can be regional, country based or multi-national. Unlike shared services, GBS global business service serves beyond basic transaction functions, has expertise to deliver and incorporate multiple high value functions into the process, such as data analytics and consulting.
The higher value functions offered by a global business services model also means that it embraced new tools and technologies in order to deliver these higher value functions. Rather than a service provider, a GBS services company acts more of a business partner of equal standing to the company it serves. It runs like a business and has the power and control of the process.
What are the Similarities and Differences Between Global Business Service and Shared Service?
In a nutshell, both Shared Service and Global Business Service have the objectives to improve processes, reduce costs, and improve service quality.
However, there are key differences between the two that makes GBS Global Business Service a more suitable model for supply chain operations than the former one.
How Does GBS relate to Supply Chain Processes?
A study by The Hackett Group has observed an increased adoption of GBS global business solutions for supply chain operations. As GBS services move to embrace higher value and knowledge-based functions, Supply Chain seems to be the next area that can take advantage of the model for value creation and cost reduction. A recent survey by the firm found 24% of them support supply chain and 31% support order management functions. An additional 10 to 15% of GBS organizations are looking to expand into the supply chain in the next few years.
Supply chain related operations that are already supported by many GBS organizations include direct procurement and order management. Supply chain management is seeing a raise in adoption as well in 2020. Below is a chart taken from the Hackett Group showing the activities within the Supply chain management process and how they are broken down under GBS. The newer activities that are being incorporated into the GBS structures include logistics and transportation, direct procurement, manufacturing, and supply chain planning.
Moving into GBS >
|Transactional||Knowledge-Based||Not a Fit for GBS|
Common Practices of the New Supply Chain GBS Delivery Model
According to Hackett Group, there are some common practices emerging from the new supply chain GBS delivery model, particularly with service design, service partnering, organization design, and governance.
Organization Design and Governance
Benefits of GBS Global Business Services
The biggest benefits of GBS, according to the Hackett Group, include cost optimization, productivity improvements, improved quality, and improved compliance.
Steps to Get There
So, what does it take for you to adapt the Global Business Services Model for your supply chain processes? The Hackett Group recommends a standard 10-step approach regardless of which functional area your business is looking to centralized. Though the 10-step approach is a good guide to get started with GBS implementation, feel free to adjust and alter based on the actual process the business is going through.
There is an increasing adoption of the Global Business Services Model for supply chain processes to increase operational efficiency, lower costs, and improve quality and compliance. GBS Global Business Services is a more integrated and mature version of the Shared Services Model which is generally used to centralize back office functions. GBS services, on the other hand, delivers higher value functions such as business analytics and consulting. This kind of knowledge-based function is one reason why GBS is moving into supply chain processes.
A Global Business Service is global, multi-functional, has shared technology platforms, value based, single reporting system, brand equity, and outcome-based process. There are few things to consider before starting your own GBS migration. You should:
As you adapt the GBS for your business, you will see the benefits of this new model and how it makes your supply chain process better overall. If you are interested in how digital tools can help you manage and streamline your supply chain process, contact us at CBX for more guidance.
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