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Competitive Advantage increasingly emphasizes logistics and driving value throughout the supply chain. Monitoring, controlling, and evaluating the supply chain significantly impacts the business model’s alignment. It enhances efficiency and drives value. It enhances efficiency and drives value.
Outsourcing of components within the value chain is only advised when the competencies are not central to the business’ product. They should not be essential to the service offerings. They should not represent a key differentiator in the market.
Core competencies that differentiate one business’ product or service offerings from competitors should not be outsourced. Outsourcing them diminishes the business’ competitive advantage. It can also create an unhealthy dependency on outside vendors.
Product Supply Chain
If a business’ core competency rests on data as a service (DaaS), the company must retain research, data analysis, and collection competencies internally. The business should keep these competencies in-house. The reporting function should also be retained internally. These competencies should not be outsourced. These core functions are integral to the business.
If a business’ core competency rests on the designing of a specific product, this skill set should remain internal. It should not be outsourced. Another example includes research. If a business’ core competency rests on specific research topic expertise, this skill set should not be outsourced.
Digital Services Supply Chain
Outsourcing any of these competencies can diminish the business’ competitive advantage. It can also cause these internal competencies to diminish over time.
Understanding this is crucial when building a business’ competitive advantage, strategic vision, and asset development efforts.
Supply Chain KPI’s
The following criterion and questions can be referenced when deciding if a competency within the supply chain should be outsourced:
Expertise:
- Is the vendor an expert in this area?
- Have they worked (or been affected by) this topical area?
- What is their perspective and is it aligned with your business’?
- What core competencies need to remain ‘ in house?’ and which can be outsourced?
Quality:
- Is their product/ service/ information usable as received?
- Or does it need more processing and ‘work’ in order to be incorporated into the business?
- Are error rates in production and/or product/service use within tolerance?
The Micro attributes specify the type of performance we want to achieve in order to reach our business target (EdX.com).
The Macro attributes specify the sizes of the market segments. They also indicate the locations we will try to reach with the micro attributes. The Macro Attributes are just the hard specifications of what the supply chain has to achieve (EdX.com).
Location:
- Where is vendor located and how will this impact the pipeline?
- Does their location impact their expertise?
- Does this have an impact on regulatory requirements?
Values:
- Does the vendor understand your business culture, values, processes, and priorities?
Cost should not be the primary criterion by which partners are evaluated. Their location, product / service quality, and subject matter expertise can greatly influence the business. Expertise can be ‘lived’ or only ‘read about.’ Their values are also essential. These factors affect the business’s ability to merge the vendor’s ‘inputs’ into the network. This should be done without error, diminishing quality, or causing customer satisfaction to suffer.
Network calibration is an ongoing process that never ends. Building in outsourced components allows the business to dedicate more resources to core competencies. These core competencies create the competitive advantage. This strategy can also increase capacity, decrease distractions, and potentially increase opportunities to explore new product/service innovations. It’s a win-win as long as the core competencies stay ‘in house.’
Work Organization:
- How is the work organized?
- Artisan structure?
- Line structure? Or
- Functional Structure?
The following tool is available for identifying and documenting supply chain goals and opportunities to support innovation:
Resource:
Syed M. Zubair Bokhari – XDIMENSION SOLUTIONS. (2010, December 3). Retrieved September 08, 2017, from http://www.scdigest.com/assets/FirstThoughts/10-12-03.php
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