Firm Never Outsource Its Core

¶ … firm never outsource its core capabilities? What happens if a supplier who is willing to supply goods and services based on these core capabilities at a significantly lower price approaches the firm? What should the firm do? As a general rule firms should never outsource their core capabilities because those factors, whether they be processes, products or services, are what make it unique. Without those core capabilities any company will lose its uniqueness and over time its ability to complete in markets that are rapidly changing as well.

Companies needs to realize that even if an outsourcer or supplier offers them service or products comparable to their core competencies that the surrounding systems and interconnecting information workflows cannot be replicated. The culture of any business resonates with this core competency; outsourcing it is comparable to taking the heart out of a business. A company should decide to concentrate more than ever on its core competency and outsource any extraneous element or factor that may get in the way of them performing well.

2) Research how operations management changed over the past 100 years, current technology and future trends. Apply this information to determine how fast it will take African countries, China and India to catch up and surpass the United States and other developed countries. Operations Management has progressed the most rapidly in the last 40 years with the advent of computing technology and the Internet, which serves as a communication channel across diverse manufacturing and supplier-based nodes in fulfillment networks.

To use the 100-year timeframe or metric is misleading because the pace and intensity of innovation in Operations Management is accelerating and growing faster than linear projections can define. Given the strong foundation of analytics, pervasive computing power and the Internet, it is feasible that 3rd world nations including Africa, China and India could catch up and surpass the United States within twenty years or less. In addition to these technological factors there is also the fluidity of people moving across borders and throughout regions of the world as well.

This all adds up to an exceptional pace of change globally for Operations Management as a discipline. 3) Research the Theory of Constraints by Eli Goldratt. How does this theory apply to the company, such as Kroger or Circuit City? The Theory of Constraints most applies to Kroger and Circuit City from the standpoint of streamlining and making more efficient their supply chain, sourcing, procurement and logistics strategies, making it possible to keep products that sell well on their store shelves.

The Theory of Constraints also is invaluable in terms of helping the management teams in those retail chains determine the optimal mix of inventory for any given month or season as well, as the Goldratt model.