Strategic Supply Chain Management - Supply Chain Online

CHAPTER 1 Core Discipline 1: View Your Supply Chain as a Strategic Asset 15
What areas of expertise are—or have the potential to become—strategic
differentiators These are the activities you should keep in-house and
make even better. Consider outsourcing activities with low strategic
importance or that a third party could do better, faster, or more cheaply.
Outsourcing allows companies to
ramp up or down quickly, build new products,
or reposition themselves in the marketplace—all
by leveraging the expertise
and capacity of other companies. This
added flexibility and agility can make an
enormous difference in today’s competitive
global markets. Most important, though,
outsourcing allows companies to focus on
their core competencies and enhance their
competitive positioning.
Before moving forward, however, be
sure to carefully consider the risks and
strategic ramifications of your outsourcing
decisions. Introducing new products, managing
inventory levels, and ensuring that the
supply chain configuration supports competitive customer lead times—
these are strategic activities that cannot be delegated to a third party. Be
sure to consider other key questions that will drive your decision. Should
outsourced skills also be maintained internally, or are they no longer
needed Which existing skills should be strengthened Will new tools or
skills be needed, such as the ability to manage inventory across the
extended supply chain
Thinking only in terms of “Can it be done more cheaply outside” is
unlikely to provide a strategic solution.
Outside partners can deliver three potential advantages:
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Consider
outsourcing
activities with low
strategic importance
or that a third party
could do better,
faster, or more
cheaply.
Scale—Third-party providers often can offer services more
cheaply because of a large customer base that keeps utilization
rates high and unit costs low. External partners also can help
companies to scale up production quickly without having to
invest in new manufacturing capacity.
Scope—For companies that want to expand into new markets
or geographies, outsourcing partners can provide access to
operations in new locations which would not be economical
to replicate internally at current business volumes.