Human resources management case study

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How Does ODW Logistics, Inc. Help Global Firms Achieve a Competitive Advantage through Its Warehousing Activities?

An increasingly common practice among a wide range of industries is to outsource those aspects of their business operations that are not able to be conducted efficiently and effectively in-house to allow companies to focus on their core competencies to create a competitive advantage. In this regard, some companies have managed to successfully outsource troublesome or cumbersome aspects of their business operations, including warehousing management operations that were formerly highly troublesome and expensive to maintain. One company that offers an efficient warehouse management system for its customers for this purpose is ODW Logistics, Inc., of Columbus, Ohio. This paper provides an overview of outsourcing functions such as warehousing and how it can improve a company's ability to focus on its core competencies, followed by a summary of the research in the conclusion.

Review and Discussion

Many companies today possess a valuable resource in the core competencies that have developed within their organizations; establishing links between the organization's unique competencies can provide companies with a competitive advantage, provide powerful capabilities in technology and design (Prahalad & Hamel, 1990), and enhance a company's ability to deliver services or products to market (Dougherty, 1995). Furthermore, establishing these types of connections with core competencies also facilitates a company's efforts to adapt to market changes because such links tend to improve overall innovation management, enable the company to reconfigure its resources, and provide a framework in which to experiment with new concepts (Dougherty, 1995). In this regard, Lowson (2002) reports that, "Adherents believe that the organization should concentrate upon its core competencies or unique capabilities then aggressively seek ways to eliminate, limit, or outsource activities where the company cannot attain superiority to those firms specializing in that field; unless those activities are essential to its strategic focus" (p. 77). According to Gottfredson, Puryear, and Phillips (2005), "Outsourcing is becoming so sophisticated that even core functions like engineering, R&D, manufacturing, and marketing can -- and often should -- be moved outside. And that, in turn, is changing the way firms think about their organizations, their value chains, and their competitive positions" (p. 132).

The first step in the outsourcing process is to identify which activities of the organization are considered "core" and which can be sourced externally to the third-party providers while retaining a degree of control over the operations (Lowson, 2002). In fact, today, the most common examples of outsourcing to allow a focus on core competencies include the provision of warehousing, transportation and information technology and administration services; however, loss of control of a vital function remains a long-term concern (Lowson, 2002). Having identified which activities of the organization are suitable for outsourcing the next step is to determine how best to source them out (Gottfredson et al., 2005).

One company that has developed a valuable resource for companies in search of such superior warehouse management services to allow them to focus on their core competencies is ODW Logistics, Inc. (hereinafter "ODW" or "the company"). This company reports that it is a major player in the third-party logistics industry, regularly listed as a top 100 3PL; ODW also operates more than 2 million square feet of warehouse and distribution space (Our history, 2006). According to their organizational Web site, ODW warehouse management system (WMS) is powered by the company's Warehouse Distribution Logistics System (WDLS). The company reports that WDLS is a full-featured WMS that is designed to operate highly complex and sophisticated logistics facilities. The company also notes that it has partnered closely with software developers, Codeworks, LLC., for the past decade in an effort to deliver successful information systems solutions to the logistics industry that feature:

Fully scalable, integrated Warehouse Management System;

Full featured WMS application;

Robust database infrastructure;

Recognized leader in 3PL software;

Reliable IBM iSeries (AS/400) platform;

Ironclad architecture and a dynamic database provide seamless integration capabilities;

WDLS is dynamic, flexible, robust and reliable;

Designed to track the movement of inventory into, through and out of a facility;

Flexible environment enables it to meet most any demand; and,

Data exit points allow instant access to real time information (Warehouse management systems, 2006).

According to ODW, some of the benefits that these services and features provide to the outsourcing company include:

Single source distribution/transportation

State of the art Warehouse Management System

On-site ownership and seamless distribution

Extensive, Value-Added Services

Contract warehousing flexibility

Reduced fixed costs

Real time inventory management system

Pay only for space and services utilized

Inside rail service

Window for order processing according to your timetable

Temperature controlled & refrigerated space

Accurate distribution costs (What are the benefits?, 2006).