A sourcing strategy for enhancing core capabilities

Authors: Gottfredson, Mark; Phillips, Stephen

Source: Strategy and Leadership, Volume 33, Number 6, 2005 , pp. 48-49(2)

Publisher: Emerald Group Publishing Limited

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Abstract:

Purpose - <IT>Most companies focus on using outsourcing to achieve cost cutting. This article urges them instead to consider outsorcings potential for capability enhancement.</IT> Design/methodology/approach - <IT>Reports on a handful of companies that place outsourcing - onshore or off - in a strategic context.</IT> Findings - <IT>Leading companies start by analyzing not just where they can outsource to lower costs and improve quality, but which capabilities are vital to their core business.</IT> Research limitations/implications - <IT>A recent Bain survey of large and medium-sized companies reports that only 10 percent are highly satisfied with the costs they're saving, and a mere 6 percent are "highly satisfied" with offshore outsourcing overall.</IT> Practical implications - <IT>Outsourcing has become so sophisticated that even functions like engineering, R&D, manufacturing, and marketing can be moved outside.</IT> Originality/value - <IT>The authors show that it's no longer a company's ownership of capabilities that matters, but rather its ability to control and make the most of critical capabilities. In other words, capability sourcing has become strategic.</IT>

Keywords: Competences; Core workers; Operations management; Outsourcing; Sourcing

Document Type: Research article

DOI: http://dx.doi.org/10.1108/10878570510631675

Publication date: 2005-12-01

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