It often makes sense to pool resources. Farmers have been doing so for decades by collectively owning expensive combine harvesters. France, Germany, the United Kingdom and Spain have successfully pooled their manufacturing power to take on Boeing with their Airbus. But does this mean that shared services are right in every situation?
The Main Reasons for Sharing
The primary argument is economies of scale. If the Airbus partners each made 25% of the engines their production lines would be shorter and they would collectively need more technicians and tools. The second line of reasoning is that shared processes are more efficient, because there are greater opportunities for standardisation.
Is This the Same as Outsourcing?
Definitely not! If France, Germany, the United Kingdom and Spain has decided to form a collective airline and asked Boeing to build their fleet of aircraft, then they would have outsourced airplane manufacture and lost a strategic industry. This is where the bigger picture comes into play.
The Downside of Sharing
Centralising activities can cause havoc with workflow, and implode decentralised structures that have evolved over time. The Airbus technology called for creative ways to move aircraft fuselages around. In the case of farmers, they had to learn to be patient and accept that they would not always harvest at the optimum time.
Things Best Not Shared
Core business is what brings in the money, and this should be tailor-made to its market. It is also what keeps the company afloat and therefore best kept on board. The core business of the French, German, United Kingdom and Spanish civilian aircraft industry is transporting passengers. This is why they are able to share an aircraft supply chain that spun off into a commercial success story.
Things Best Shared
It follows that activities that are neither core nor place bound – and can therefore happen anywhere – are the best targets for sharing. Anything processed on a computer can be processed on a remote computer. This is why automated accounting, stock control and human resources are the perfect services to share.
So Case Closed Then?
No, not quite. Technology has yet to overtake our humanity, our desire to feel part of the process and our need to feel valued. When an employee, supplier or customer has a problem with our administration it’s just not good enough to abdicate and say ‘Oh, you have to speak to Dublin, they do it there’.
Call centres are a good example of abdication from stakeholder care. To an extent, these have ‘confiscated’ the right of customers to speak to speak directly to their providers. This has cost businesses more customers that they may wish to measure. Sharing services is not about relinquishing the duty to remain in touch. It is simply a more efficient way of managing routine matters.
Talk to Denizon about which services to share: contact us.
Denizon Team
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