Outsourcing is an easy way to:
• Become irrelevant in your own supply chain.
• Hollow out the resilience and strength of your own business
• Lose control of your own quality and performance capability
• Be bypassed and ignored by your customers
• Destroy the foundations of your own business
• Lose your workforce and their expertise
• Become reliant on the agendas, variability and vagaries of others
• Limit your flexibility to grow fast, shrink in response to markets
Its Simple. Rather than carry all that overhead cost of doing it yourself, just outsourcing your core competencies to cheaper suppliers may get a lot of praise from your accountants or shareholders for your cleverness as you save money.
Unfortunately you may have sowed the seeds of your own destruction, and critically weakened your business which may gradually vanish without trace from your market.
Of course you can safely and sensibly outsource peripheral matters such as buildings maintenance, office cleaning, security, and even some critical processes such as payment processing, IT support and recruitment.
But if your core business is in making widgets then to stay in business you need to keep up with
the technical advances in widget design,
the advanced materials that are being used for making widgets,
the streamlining of widget production,
the maintenance of widget producing machinery.
If you outsource all these core competencies to an overseas supplier and simply badge someone else’s product with your brand, then add your mark-up, then one day, quite soon, your customers will recognise that they can go directly to your supplier.
You will have accomplished the final cost cutting exercise. You will have engineered yourself out of business and won’t incur any overheads, or need any people, or facilities.
Remember – BMW started out as a motorcycle repair shop in Bavaria that imported and assembled cars for sale in Germany made from kits of parts provided to them by the British car company Austin Motors.