Chapter 9 Summary

The increasing move by companies to outsourcing has increased the key decision area of make or buy and the task of managing the supply chain that results. Key areas within this aspect of operations are discussed:

• What is a supply chain? – the mix of internal and external phases of a supply chain need to be recognized and their joint roles in providing products need to be well managed.
• Make or buy? – choosing whether to make or buy is a key decision and various considerations need to be taken into account, including the retention of core technology, strategic factors and the supply chain management issues involved.
• Deciding what and how much to make in-house – the mix of benefits derived from making in-house and those derived from outsourcing offer different outcomes. These include compound market and technological intelligence, increased control over aspects of a firm’s competitive environment, the provision of low-cost opportunities, more ability to differentiate products with in-house provision compared to freeing resources, reducing operating costs, access to world-class capabilities and increased focus on a company’s own core tasks that come with outsourcing.
• Alternatives to making in-house – rather than making in-house, companies can choose from a range of halfway positions including joint ventures and non-equity-based collaborations.
• Domestic versus offshore sourcing options – the decision whether to outsource using domestic or offshore providers needs to be based on the level of strategic fit. Recent research shows that with low-cost alternatives is a reluctance to respond to changes in either product or lead time requirements.
• E-procurement – the increasing role of e-procurement needs to be considered as part of the supply chain provision.
• Managing the supply chain – a range of issues needs to form part of the task of managing the supply chain including managing uncertainty, level of customer/supplier dependence, the role of supply clusters and the ways to cushion the supply chain from the inherent instability of the market.