When times are tough, focus on the core (competencies)

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The economic crisis unleashed by the outbreak of COVID-19 has hurt economies around the world. When times are tough, shedding non-core business processes is one of the most prudent and effective ways to cut costs while improving performance.




By Tim Proome, general manager of Supply Chain Services, Tarsus Distribution


Know your Core from your Context  

There is more pressure than ever for companies to provide superior customer service. In his book, ‘Dealing with Darwin’, Geoffrey Moore argued for the distinction between Core and Context, an approach that separates the few activities a company does that create true differentiation in customers’ eyes (Core), from everything else that a company needs to do to stay in business (Context). A focus on core competencies increases the sustainable competitive advantage of a company by creating value for customers.

 

The core competency of any business is the strategic, competitive advantage it holds over its competitors. This can include equipment, processes or intellectual property, as well as know-how or specific abilities that a company performs especially well. It’s about establishing what you are really good at doing and then concentrating on that.

 

The importance of innovation

One of the key competencies of service organisations is innovation. Outsourcing business tasks like supply chain management to a third-party logistics (3PL) provider frees up employees’ time, creating an environment in which ideas are more easily able to flow and be further developed into innovations. This in turn drives improvement of the business model and the delivery of better products or services.

Access to infrastructure and expertise

Working with a 3PL provider gives your business access to experts who not only understand your supply chain, but also have insight into a range of logistics problems and how to solve them.

Leading 3PL providers offer state-of-the-art warehousing, the latest technology systems, increased speed to customer and improved flexibility and visibility across the supply chain, enabling your business to meet customer demands more effectively.

 

The research proves it

In the Gartner 2019 Logistics Outsourcing Strategy Survey, approximately 70% of respondents stated that functional, end-to-end (E2E) supply chain and overall business objectives have been met or exceeded with the help of supply chain outsourcing counterparts.

Click here to read a great article we found on even more benefits of 3PL.

References

https://www.amazon.com/Dealing-Darwin-Companies-Innovate-Evolution/dp/159184214X

https://www.gartner.com/en/documents/3969683/logistics-outsourcing-survey-and-analysis-a-deeper-look-

https://www.supplychaindigital.com/logistics/top-5-benefits-third-party-logistics

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