Outsourced manufacturing can be an effective way to tackle supply chain uncertainties, according to an article in the International Journal of Logistics Management.
A team from the Dalian University of Technology and East Carolina University looked at the potential to use outsourcing as a means of overcoming uncertainty within the supply chain, and in particular how it might be beneficial in coping with different volumes of customer orders.
In their article, they refer to outsourcing as “a mechanism … to deal with sudden arrival of higher priority jobs that require immediate processing, in an in-house manufacturer’s facility from the perspective of outsourcing”.
This situation could mean that even firms with their own in-house manufacturing capabilities need to look to outsourced manufacturing as a form of ‘top-up capacity’ for larger or short-deadline orders.
In their conclusion, the team write that “in a highly unstable and uncertain business world, outsourcing could serve as an effective tool for dealing with supply chain uncertainties related to customer orders”.
“Collaborating with subcontractor on production operations and distribution operations can be a source of volume flexibility,” they add.
The full article is published in the International Journal of Logistics Management Vol. 25 Iss: 1 (2014), which is the currently available issue of the periodical at the time of writing.