Unlocking hidden value in your business?

Monday 19th June 2017

Visiting a business recently I was struck by the impressive focus of this company on its core capabilities. After over 50 years in business, this group has expanded and moved with the changing times. However at its heart, it continues to understand its core proposition and what it is that makes it stand-out!

Too often businesses grow organically, morphing into something that would never have occurred to their originator at the outset. So it’s a good idea from time to time, to take a step back from a business, take a holistic and detached look at what is happening and re-envisage the future.

Once solely a manufacturer, this business had developed real competence in distribution-systems and storage capacity to service its consumer-product offer, so when looking for areas of efficiency or growth it was a natural step to leverage this capability. Now providing a warehousing aggregation facility for other consumer-product businesses, it is able to add distribution and logistics to its repertoire of strengths; fully utilising its assets and adding significantly to the bottom line.

So are there real advantages to outsourcing warehousing needs?

British Luxury footwear brand LK Bennett services the entire collection through a third party specialist provider. Initially all fulfilment was managed through an in-house operation but as the plan to grow the retail network demanded huge expansion, it was decided to move to a ‘specialist’, able to provide a ‘full warehousing solution’ to support the ambitious plans.

Certainly if expansion plans outstrip capacity to hold stock, outsourcing is an obvious choice. But also there is the efficiency aspect. Price elasticity is limited, product costs are high, so in some cases the opportunity to off-load onerous fixed costs of warehousing, presents an interesting opportunity for business looking to improve margins.

Have you considered reviewing your value chain? Are there hidden opportunities for scale and margin improvement waiting to be unlocked in your business?