Operations Management For Dummies, 2nd Edition

Chapter 15

Sourcing Strategically

IN THIS CHAPTER

Understanding outsourcing’s pros and cons

Deciding what to outsource and choosing a supplier

Managing outsourcing relationships

Many components of a product are being outsourced to suppliers who have no direct connection to the buying firm. Companies are even outsourcing the production and delivery of the products and services that make up their core business. If these production and delivery operations aren’t performed well, a firm’s costs can increase, customer service can suffer, brand reputation can be harmed, and market share can decline — sometimes fatally.

This chapter describes the pros and cons of outsourcing, how to select and manage your suppliers, and highlights the three most important decisions for successful outsourcing: What to outsource, who to outsource to, and how to manage the relationship with suppliers?

Seeing the Upsides and Downsides of Outsourcing

Hiring a separate company to build a product or provide a service can make sense for some companies because outsourcing may be cheaper, provide higher component quality, or reduce capital costs. But sometimes it’s better to just do it yourself. Outsourcing the ...