8. Why Should I Outsource?

Why should I outsource? No company can be great at every single thing they need to do in order to sell a product. So rather than trying to do everything and not doing it well, we pick and choose those few areas we’re good at. And then, everything else, we find specialists who are able to do it even better than we could. That way we ensure that we get access to the best processes possible, and even our competitors could not possibly get better access. And we’re also trying to find the right suppliers in addition to the process,
regardless there are benefits and risks to outsourcing.
The number one benefit that outsourcing provides is access to world class resources. In other words, the company that we’re outsourcing to is a specialist in that one area, that is all they do. For example, if we are not very good at logistics, we try to find a logistics service provider. They only specialize in logistics, so they’re going to be very good at it. The other one is we also are going to be able to have access to economies of scale we wouldn’t otherwise have, because this one company provides service to a wide range of customers. So they’re able to create these economies of scale, and typically provide us with a much better cost that we would be able to do on our own. And lastly, outsourcing companies are able to access special resources that might be hard to access, such as low cost labor. Because they can put factories in areas where people will work for a lot cheaper, ultimately making our product less costly, and it becomes a benefit to our customers. This also provides a benefit to the world economy, because now different countries can focus on specific areas. Asia can focus on manufacturing, high tech items. India can focus on providing top-notch services in the IT industry, and other countries will just play to their strengths. Rather than everybody trying to do everything, we collaborate and each country, and even each company, will play to their strengths. This is an overall benefit to the world economy. There is also a lot of flexibility in outsourcing, because if a supplier is not performing up to the expectations that they have set we’re able to incentivize them to bring up their performance. After all, it is a legally binding contract and if they do not live up to those expectations we are able to go out and find someone else. This is a lot harder if you’re dealing with an internal department. In addition, the flexibility in terms of volume as we have for example, seasonal demand, is unsurpassed with a service provider because they can leverage multiple customers, and multiple demand patterns that customers may have. They are able to react much more quickly to changes in demand than a single company with internal operations would be able to. Outsourcing might not be all that cost efficient once you factor in all of the other costs that go with outsourcing a process. You have to consider the total cost of ownership when outsourcing, and this not only includes the cost of the product itself, but also logistics cost which are made up of transportation, warehousing, and inventory cost. Administrative costs, in other words, the cost of managing the whole process that is now performed by an outside company. Quality costs, the cost of complexity, because your organization just became a lot harder to manage. And then finally, we have to figure out how these arrangements are set and make sure that all of these costs are factored into the price. Some of these other things could be operating in a war zone, or in an area that used to be stable and now becomes a war zone. Or using conflict minerals, such as Nintendo, who got caught using conflict minerals in their products but in fact it was one of their suppliers that changed sources to a conflict mineral source. Nevertheless, these factors can have huge financial and reputational implication on the company itself.

Jim Rohn Sứ mệnh khởi nghiệp