Supply Chain Management

Outsourcing is extensively used by both manufacturing and service industries. Many business functions are being outsourced so as to enable organizations to concentrate on their core competencies. Companies outsource for strategic, tactical and transformational reasons.

Improving business processes, gaining access to world class activities and sharing risks are some of the strategic reasons for outsourcing. Tactical reasons include controlling operating costs, and making capital funds available for other uses. Transformational reasons include bringing faster and newer solutions to customers, responding to shorter product cycles and tackling competitors.

An important step in outsourcing process is decision making. The various steps in decision making are: analyzing technological trends, assessing strategic alignment and core competencies, cost analysis and considering non cost factors. A number of other aspects in outsourcing should be considered like the involvement of suppliers, the supplier base, single vs multiple sourcing or local, national or international sourcing.