Michael Marks discusses how companies can differentiate themselves with the help of outsourcing.

Michael Marks discusses how companies can differentiate themselves with the help of outsourcing.

Do you think of outsourcing as something to be done because you simply can't get everything done you need to? If so, you may be missing an opportunity to think strategically and use outsourcing to help you focus on the "magic pixie dust," the "secret sauce" that makes your business unique.

"Here's another way to think about it," said Michael Marks, managing partner, Indian River Consulting Group, during a session at the recent Heavy Duty Aftermarket Week in Las Vegas. "How do you be remarkable? How do you make it compellingly easy for a customer to choose you instead of somebody else? The real answer for outsourcing is the strategic definition – do what you do best and buy the rest."

Distributors are turning to local and national companies to handle operations such as delivery, employee leasing, human resources, IT, accounting and training.

Marks stressed the importance of really figuring out what makes your company unique. Face it – how many of your competitors say they are successful because they offer great service and great people? "If everyone is good enough, the race to the bottom on price will start, changing the game," Marks said.

What to outsource?

"Think critically about what your sticky customers are actually buying from you without using the old tired words of service, relationship or trust."

Marks recommended companies sit down and consider what their three greatest strengths and their three greatest weaknesses.

"You never outsource your sweet spot – the reason customers buy from you. Those are your family jewels."

Candidates for outsourcing meet two criteria:[PAGEBREAK]

1. The process or function has been a longstanding weakness (or at least a pain in your rear)

2. The process or function is not something that is critical to a customer choosing you as a supplier.

He suggests a brainstorming meeting with employees to talk about what areas might be good to outsource.

"Think about where do you stink, what you just can't get it right. As long as it's not a core part of your business, that's a candidate for outsourcing."

Things to consider

"Just remember that outsourcing is a bit like getting married – it is much easier to get into some situations than to get out of them," Marks said.

He emphasized that it's important to choose the right partner for outsourcing. "Your potential outsourcing partner must have the same importance to you that you do to them or someone will get hurt." He suggests choosing a company around the same size as your own.

And start slow. "It is more important to learn how to do it right than to rush in solving all your large challenges," Marks said. "Find something that is a second-tier challenge and build a proof of concept around it. Move on to larger challenges as your skills and experience increase."

Keep in mind that it does require a front-end investment to manage an outsourcing arrangement properly. Be clear on what you're going to measure in order to assess the success of the project. Get your CFO, your attorney to look over the agreement.

"You need to be very specific about what you want, and there will be a cost to disengage," Marks said, suggesting a 90-day proof of concept with an easy exit option if things don't work out.

Overcommunicate the changes you're making to employees and customers, Marks said, including hotlines to deal with any problems that come up. And emphasize that you're not must making this change to cut costs. For instance, you might tell an employee, "You're my senior counter guy, you hold customer relationships in your hand, and I want you to focus on them instead of this other paperwork that's getting gin the way."

 

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