To successfully operate within a marketplace that prizes speed and changes direction frequently, many companies are partnering with others for services that are not core to their business. They say the time and money they save, plus the access to expertise they gain in the process, helps them compete better in their industry.
INC. magazine’s 2016 study of the outsourcing habits of hundreds of businesses throughout the U.S. revealed that 64 percent of them were outsourcing services that weren’t key to their core business. The companies cited three main reasons why the move was beneficial: Outsourcing provided them with access to functional expertise; cost reductions; and more time to focus on their core competencies. Another reason was the benefit of greater operational flexibility.
These reasons closely corresponded to what the companies said was their top priority – and most valuable lesson learned – in the decision to partner with another company for services that are not core to their business: ‘align everything with your business objectives’.
Most business leaders would agree that their companies perform at optimum levels when they leverage top expertise, use resources efficiently, and focus as much effort as possible on what their companies do best. So outsourcing services they need to function, but aren’t their core business, makes sense if the partnership delivers these results.
The ideal outsourcing relationship offers ‘a collaboration in which the outsourcer provides advice and guidance along with the core service’ provided, the companies in the study said. They also said the best outsourcing partnerships were those in which the companies involved had frequent communication.
When describing the right type of outsourcing partner and how it delivers for his company, The Ice Cream Club Co-founder Richard Draper says, “We have to run like clockwork. Minimal downtime is crucial and (our partner) is always part of the solution, even if it’s after hours and late at night. Their responsiveness is exceptional. (They) have the best network to accommodate these types of emergencies and have relationships with companies…so that they can reach out and get the job done if their trucks aren’t available.”
Since partnering with a third party logistics provider (3PL), The Ice Cream Club’s delivery process is more efficient, its vehicles have a better safety record, and the company’s drivers are able to provide better customer service, he added.
Office products supply company Lewis was able to increase the number of customers it served and improve customer service at the same time after it partnered with a 3PL, said Norine Miller, Vice President and Comptroller of Lewis.
“(The partner company) was able to change with us as our business changed,” she noted, “and that was how we could grow.”
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