Is Logistics A Core Competence?

09/02/2010

By Gwynne Richards, Director, Apprise Consulting Ltd and Chairman of CILTUK Outsourcing and Procurement Forum

There are many definitions of logistics available. Logistics can be all encompassing as per this description by the Council of Logistics Management. Logistics is "...the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements." (CLM 1998). Note that this definition includes inbound, outbound, internal, and external movements, return of materials for environmental purposes and the management of information.

It can...

...also simply be described as getting the right product to the right place at the right time, in good condition and at a cost effective price. When companies say they outsource their logistics to enable them to concentrate on their core competencies it is likely that they are referring to the actual warehousing and distribution operations as opposed to all the processes mentioned in our first definition.

For the purposes of this article we will therefore use the latter definition in terms of warehousing and distribution.
According to Prahalad and Hamel (1990) "core competencies are the source of competitive advantage". They suggest three tests which are useful for identifying a core competence. Namely

1) it provides access to a wide variety of markets

2) it contributes significantly to the end-product benefits and

3) it is difficult for competitors to imitate
Gutierrez (2003) states that 'a core competency is fundamental knowledge, ability, or expertise in a specific subject area or skill set'. This suggests more of a concentration on people skills and therefore whether a company sees logistics as a core competence may be dependent on the calibre of staff employed. During the 1980s and 1990s when companies outsourced significant parts... continued on page two >

 

 

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