The broken bridge between business need and business supply
On average, two thirds of any business’ activities today are performed outside of their organization by third party suppliers (see this research for more detail). And it’s a growing trend.
These suppliers support both core areas of the business (such as Apple using Chinese suppliers to manufacture its products) and non-core areas (in which every large business has thousands of suppliers providing everything from legal advice, to marketing services, to facilities management).
Your business will be no different. Just how much is performed by suppliers (as opposed to in-house) will depend on your industry, your business objectives and what stage you are at in the externalization journey. This is the way of modern business.
You use suppliers because they have become really, really good at developing and delivering what you need: goods, services, expertise, IP, new innovations and so on. They do it better than you can achieve in-house – as well as being faster, cheaper, more reliable, lower risk, more efficient, and more effective.
Great… so what’s the catch?
In core areas of spend – there is no catch. Businesses see the value in investing heavily in improving their supply chains. It’s well managed, and gets the attention and focus it deserves.
But in non-core areas? It’s a very different story. There are a number of catches. Let’s explore two of them…