“You may have great marketing communications and a superior product, but the buying experience stands between you and the customer. And that buying experience is heavily influenced by your supply-chain capabilities”
What makes this affirmation so critical is that what the final customer receives it is not controlled by only one company but it depends on the output of all participants of the supply Chain.
This view of a company as a component of a large chain of participants has transformed the way firms formulate their competitive strategies. The success of a company depends on the success of the entire chain of companies whose products or services create the value proposition for the final customer. Therefore, a competitive advantage at the final customer eyes is the result of specialization and collaboration among a broad contingent of participants, including retailers, manufacturers, third party logistics (3PL) handlers, technology solution providers and government customs agencies.
The manufacturing industry is a good example of this specialization/interdependence between firms. American OEM manufacturers made 75 percent of a product’s components 25 years ago. Today, they make only 25 percent of those components and the rest is outsourced. Delocalization has been one of the drivers for this specialization at a global scale. For example, American housewares manufactures produce only 40% locally, 85% of business machine and telecommunication manufacturing has migrated to the Far East and 75% of small appliances are produced in Far East.
The Supply Chain is the linked set of resources and processes that begins with the sourcing of raw material and extends through the transformation of these materials into intermediate/ finished products and the their distribution to the final customer
This interdependence between firms makes that, like a metal chain whose strength is limited by the weakest link, the competitively of a Supply Chain is determined by the firm with the weakest performance. If you deliver an order late because of carrier delays problems, or if you can’t meet a rush order request due to a limited supply of your raw materials supplier or a channel partner fails to properly educate your customer, the whole suply chain and your company invariably suffers.
At what point does outsourcing appear in this picture? Outsourcing is one option used to improve Supply Chain overall performance in a quick and efficient way. For example, the top 500 Fortune companies see Outsourcing as one of the top 5 strategies available to solve supply Chain problems (Fig 1). A study performed in 2005 by Cap Gemini shows that outsourcing of the logistic function reach 77% in Europe.
In spite of this trend, outsourcing is very limited in Tunisia. Local companies mostly outsource general services and HR. Related to Supply Chain, transport is the main outsourced activity. One of the barriers for outsourcing shown by local firms is the lack of strategic support at the moment of deciding to outsource. In contrast, to outsource non critical activities (General Services for example) whose impact on the firm performance is minimal, outsourcing in the Supply Chain requires a clear understanding of the strategic issues facing the company and how this process can create competitive advantages.
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