The Single Biggest Reason for Using a Third-Party Logistics Company
What does your company do? Or, more importantly, what does your company do that your competition doesn’t do? Put yet another way, why should potential customers choose your products or services instead of choosing your competitor’s products or services?
Please forgive all the questions, but we ask them to try to make a point. The answers to all three are probably not what you think.
For example, what does your company do?
Most people would probably answer in relation to the products or services supplied by the company, like “we make washing machines”. But, what your company really does, whether you’re a manufacturer, a distributor or a service provider, is do everything you can to stay in business. In a way, it doesn’t matter what you produce or sell, your actions are all focused on ensuring your company’s health and viability by constantly increasing revenue and decreasing costs.
If this all sounds like a bit of codswallop, think of it this way. Let’s say we take your first answer about what your company does, make washing machines, and isolate that process.
So, you make washing machines and do nothing but. They are the most amazing washing machines ever. You really know how to make a washing machine.
But without finding customers, preparing the product for shipping, transporting it to a distributor, accepting returns, answering customer service calls, invoicing, etc., etc., your business would only last as long as you wanted to keep pouring money into it and not get any return.
Let’s move onto the second question above
What you do that your competition doesn’t do? Your competitors, all 20 of them, also make fine washing machines. And they offer them at a similar price too, along with a call centre just like yours. So, what do you do that your competition doesn’t do? It’s not really your washing machines.
Finally, to the third question
Which is the most important of all. While all three of the questions above are related, the first two are focused on you, but the third one focuses more on your customer. Why should he or she choose your product instead of the competition’s.
Yes, your customers want a washing machine, but they can get one from 20 other manufacturers.
The thing that makes them buy from you instead of the competition, whether it’s your core competency, unique value proposition, or some other advantage unique to your company, it is the single most important part of your business because without it, your customers would probably go elsewhere.
Protecting Your Market Differentiator
Looking at everything above, the idea is that you and your competitors go through many similar business processes, yet have only a few (if you’re lucky) market differentiators to set yourselves apart. That puts a lot of importance in making sure your differentiators are strong and well-known to your potential customers.
But, while you have precious few market differentiators, most of your business’s resources are devoted to those processes that are much the same as your competition’s. While they are highly important because without them you wouldn’t even be in the game, they actually draw resources away from those things for which you are known in the market.
It makes sense for you to continually improve those processes to increase productivity and decrease costs.
But, as we discovered above, that’s not what your company does. That’s not your core competency or your market differentiator.
Wouldn’t it make more sense to transfer processes like warehousing, transportation and supply chain management, to a third-party logistics company that specializes in them? One that has already developed and uses all the efficiencies your company devotes so much of your resources to try to find?
When you give yourself the opportunity to focus more on what’s important to your customers, and give the other stuff to a specialist, you’ll be amazed at how much more you’ll have that your competition doesn’t.
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