Relationships Are Critical In Outsourcing
Are you afraid to outsource some of your functions to another company? Do you fear losing control? Do you believe it will cost more than doing it yourself?
These are the primary fears that keep many companies from obtaining the savings and peace of mind that comes from having specialists take over some functions.
Our service – logistics – is one of the most frequently outsourced functions because it provides so many benefits to businesses that can move beyond these fears.
When done right, outsourcing certain functions to another company that specializes in those functions can save you time, money and stress. Good outsourcing is like a good marriage. Both parties bring talents and benefits to the table that make both parties better than they would be alone. But, they have to work together – collaboratively – to make it a strong partnership.
Each party must learn about the other and develop the trust that each is better equipped to manage their part of the relationship. The success of the relationship relies on continual communication and a constant understanding of the needs of their partner. When the partners are right for each other, both will be more successful than either was alone. It must be win-win.
A key advantage of outsourcing, for the outsourcer is that as volume increases and the need for better systems and infrastructure increases to meet those demands, the outsourcer can benefit from the specialists scale and infrastructure. The specialist has already developed systems to handle bigger demand, and because the logistics function is the specialists core business, the function gets disproportionate investment and attention; thus allowing the outsourcer to get all of the benefits of such with investment without restricting their capital. As Jack Welch, past Chairman and CEO of GE said, “Your back office is someone else’ front office; and it’s a good bet they can do it at a profit for less total cost than you can do it on your own.”
While it may seem counter intuitive; turning a function over to another company and letting them make a profit on it can, in fact, save you more in the end; ultimately allowing you to make a greater profit than by doing it yourself.