Monday, April 16, 2012

When companies shouldn't outsource manufacturing

An excerpt from an article in Industry Week, by Jeff Wallingford, vice president, Supply Chain Strategy, Riverwood Solutions.

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The trend to outsource manufacturing has been going strong for two decades. Recently, it has been popular to speculate on whether this trend has gone too far... There are still many cases where a company may benefit by choosing in-house manufacturing over outsourcing - but only when these cases truly apply:
  • a company's manufacturing process is the source of its competitive advantage
  • a firm does something in a unique way and does not want competitors to know how to do it
  • a competitive market for the specific manufacturing service does not exist
  • there is no opportunity for the service provider to leverage their fixed capital, common overhead, specific purchasing power, or expertise
  • to capture a limited and critical resource or channel
  • it is too costly to outsource the manufacturing process because of the additional costs driven by outsourcing
Click here to read the full article.

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