Outsourcing in Procurement and Supply Chain

The purpose of the concept is to provide an insight into the benefits and drawbacks of outsourcing in procurement. It explores how organisations make outsourcing decisions and offers some useful case evidence and step-by-step implementation guidance.

Information about Outsourcing in Procurement and Supply Chain

Outsourcing is certainly not a new phenomenon. Informed by the 'make-or-buy' calculation, organisations have long contended with which activities to perform in-house and which to buy in the market (Ellram et al., 2008). The contracting out of production activities has occurred for many decades by firms seeking the advantages of specialisation, efficiency and economies of scale. However the relatively new phenomenon of outsourcing services emerged only in the late 1980s. Three main factors underpin these trends: 1) technological advances; 2) economic/competitive pressures to reduce costs and improve productivity; 3) institutional developments favouring trade liberalisation (Olsen, 2006; Lysons and Farrington, 2006).

Return to Understand Need - Market and Options Assessment topic.

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