PGP-18-234 Service Innovation – HW1 Varun Singh

What should be the way forward for Sanjay and for the supplier network?

With improving technologies as mentioned about the OCR and the changing landscape where the firm-
outsourcing partner dynamic has changed drastically rendering the concept of labor arbitrage almost trivial, some
of the suggestions to Sanjay are as follows-

1. Follow a more stringent performance metrics on the supplier network and possibly change the payment
system from a fixed cost per operator to something like fixed cost per correct entry as adjudged after
the double-key process. This will lead to the supplier partners/proprietors to adhere more to a higher
degree of service and would ultimately lessen the adjudication costs for Good-Health2U which can be
showcased to the leadership team (Todd and Mark). This would be in line with the new expectations from
them regarding on-time performance and quality delivery.
2. With improving technologies such as the OCR technology, the overall quantum of data entry work will
reduce with a high degree of uncertainty in the coming times, hence, it makes sense to do a degree of
amalgamation of the supplier base (32 right now) to a smaller manageable number. In such a scenario, the
vendor bases can be ranked on the basis of pre-defined set of KPIs which have been deemed important
by Good-Health2U and the lower ranked vendors can be relieved of the data entry work.
3. In continuation to this point, an ever increasing need to improve the performance KPIs from all customers
is bound to happen for SmartKey. To this end, the “deskilling” philosophy for the operators needs to be
reversed and a training program should be extended to the operators which was currently being done for
the line in-charges. This will have a cascading effect and will arrest the quality of the data entries to a large
extent.
4. Adhering to the vision of the CSR initiative of providing employment in smaller towns and suburbs, the
vendors which were relieved can be reassigned with appropriate training regimes to take care of additional
work packages that can be bagged by SmartKey (such as the adjudication task) owing to a long-standing
relationship and redefine itself as more like a partner with strategic involvement rather than the current
arms-length vendor relation and a renewed improvement in the performance through adherence of the
solutions as suggested above. This will prevent any sort of risk of ex-workers joining competitor firms and
undercut the advantages that SmartKey hopes to give.
5. As one of the primary reasons cited in the case, a lack of proper and seamless communication for which
Sanjay should invest in a more robust information flow into the system and sharing timely data with
consolidated actions and milestones with Good-Health2U
6. In the longer term vision, Sanjay should look into ways of eliminating the sub-outsourcing system itself
through ways such as re-hiring key vendor staff on its own payroll while providing more control and
visibility to the process.
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