Redefining “Core Competencies”: Labor Market Intermediation in Outsourced Warehouses

Abstract

For nearly a half century, questions of why and how firms navigate the “make-buy” decision have animated fields as varied as industrial relations and economic geography. The idea of “core competencies” became the dominant explanation of corporate decision-making processes, where any activity deemed outside of the central specializations of the firm is a possible candidate for outsourcing. Coupled with the focus on short-term profit taking, corporate leaders have grown increasingly focused on shedding less-profitable activities and shifting supply-chain risk—leading to high levels of lead-firm influence over subcontracting markets and the cost-based competition that permeates them. This paper examines the role of third-party logistics companies (3pl s) in the warehousing sector. It argues that efforts to contain operational costs increasingly are focused on labor and that the ability to access and deploy low-cost labor is among the “core competencies” touted by many 3pl s in the warehousing sector.