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Outsourcing is only as effective as you make it. By approaching your outsourcing arrangements with the proper amount of due diligence, you protect yourself from future concerns. Dickies Canada is one company that has done it right.
Outsourcing continues to be a popular method of shifting the responsibility for non-core functions of a business into other, often more capable hands. However, the reasons for outsourcing vary. Some companies consider it a long-term commitment to a service provider. Other companies outsource certain functions only until they have the capacity to bring such functions in house. Before choosing an outsourced provider for any service, an organization must understand the long-term goals of finding a third party service provider. From that, they can choose a partner that can work most effectively with those needs.
Dickies Canada provides a useful case study of this important practice. Dickies Canada was established through an acquisition in the late '90s of Buckeye Industries, a well-known and long-established workwear manufacturer and distributor in Canada. The company at that time had not invested in keeping its distribution infrastructure up-to-date.
The new owner of Dickies Canada, Williamson-Dickie Manufacturing of Fort Worth, Texas, was looking for increased sales, market penetration and aggressive brand and product offering growth.
The new Canadian division was meeting its latest mandate from the new parent company by successfully growing the top line and expanding market share, but it was clear that the company's ability to meet customer distribution requirements needed attention.
"As a supplier to retail customers such as Wal-mart and Sears, not meeting ship dates and fulfilling customer orders completely and on time can be expensive in terms of fines and non-compliance impacts, not to speak of negatively impacting our sales and brand growth strategy," says Kirk Ehrlich, president of Dickies Canada. "Efficient and seamless distribution operations was a capability that we needed to demonstrate to be successful."
In 2004, the company engaged supply chain consulting firm Supply Chain Alliance to assist them with the outsourcing of their Canadian distribution requirements. "We initially approached Supply Chain Alliance (SCA) to help us perform a business case that compared an internal build vs....