Every distribution company has a weakness, whether it's warehousing, delivery scheduling or something else. "Everybody's got something," said Indian River Consulting's Mike Marks in a recent MDM webcast. In Distributor Innovation in 2013, Marks suggests distributors discuss what it is they're worst at doing and consider outsourcing it to concentrate on what really matters to customers.
Many distributors would prefer to control everything, especially those who are owner-operators. But Marks recommends distributors focus on what they do best "and buy the rest," which frees resources for those parts of business that keep the best customers coming back for more.
For strategic outsourcing to work, though, an outsourcing candidate must meet certain criteria. Marks says one condition that must be met is that what is being outsourced must be a long-standing weakness or an enduring irritation.
It must also be unimportant from the customer's viewpoint. "You never outsource the family jewels," Marks says.
For more on resource allocation's role in competitive innovation and how to determine what customers value, view the Distributor Innovation in 2013 webcast on-demand or order a copy on DVD at www.mdm.com/innovation.
