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OUTSOURCING (FOR (Fewer direct staff, Outsource suppliers usually have…
OUTSOURCING
FOR
Fewer direct staff
Outsource suppliers usually have lower unit costs
Reduced need for capital investment
Clear, identifiable supply chain costs
Access to supplier capabilities
Can be used to expand overall capacity
Ability to focus on core internal capabilities
AGAINST
Need to share sensitive information with third parties
Potential closure of existing facilities
Reduced economies of scale
Costs involved in managing suppliers
Risks of being dependent on a supplier
Increased supply chain risks
Some loss of control
Desirable
Collaborative relationship
Quality control mechanism
Good match between company's needs & supplier capabilities
Strategic decision
Strategic value of good/service
Contribution to competitive advantage
Crticicality of component/service
Contribution to performance of final product/service
Barnes outsourcing matrix
Proprietary
In-house
Commodity
Outsource
Novelty
Outsource or in-house
Utility
Outsource
Main alternative to vertically integrated system
Contractual relationship with external suppliers
Chosen for distinct capability
(Adapted from Barnes, 2008, pp. 215–6)