Resource Utilization- Their use of people, materials, and machines will likely be more efficient than the
output of what your company would be able to achieve in the first few months/years. In addition, if they
manufacture for multiple companies, they will likely have more buying power with suppliers.
Focus on Core Competencies- Every Company has different strengths. Sometimes utilizing outside partners
allows your company to focus on its strengths and it allows the contractor to do what it does best,
Risks of External Partners
Quality control- how concerned are they about the general quality level of products that will ultimately
carry your name, not theirs?
Intellectual property- will this company protect the secrets that make your products better/unique?
Business practices- is your business partner a legal and ethical entity? Ethics?
Loss of strategic flexibility- outsourcing causes loss of flexibility in some cases.
- Strategy where a company moves manufacturing out of its home country to another country
Outsourcing ( and both)
- When a company contracts an outside firm to perform services, operations, or business
processes that could be or were previously performed in-house.
- A company that produces goods on behalf of another organization. Example: Apple
designs numerous digital devices but they outsource manufacturing to companies like Fox-conn and Pegatron.
- While this term does not have a consistent definition in the world of supply chain management, it
often refers to a type of offshoring or outsourcing where the location of the manufacturing facility is relatively close
to the location of the consumer. Typically, it refers to a shift in strategy, where a company used to manufacture
goods very far away
Manufacturing compliance, Manufacturing audits, Currency exchange considerations, Infrastructure, Customs and
C-TPAT Customs-Trade Partnership Against Terrorism
A voluntary program developed by US customs and Border Protection for companies importing goods into the US.
The program requires member organizations to report a significant level of detail related to supply chain partners
and actions for each imported shipment. In exchange for providing this information, member companies are allowed
opportunities for speedier and more hassle-free custom clearance.