A new report by SupplyChainDigest: “Supplier Integration in an Outsourced Supply Chain World: A Benchmark Report,” showed a growing trend in supply chain outsourcing among manufacturing companies.

The survey of over 100 manufacturing companies included a wide variety of industries including chemical, consumer packaged goods of which 42% were large businesses with annual revenues greater than 1 billion in sales.

The report revealed that respondents had outsourcing widespread in many areas of their supply chain including sectors such as manufacturing, finishing, packaging/packing, and distribution/logistics.

Of all the supply chain areas surveyed distribution and logistics were the areas with the highest outsourcing at 42% followed closely by manufacturing at 37%, with finishing and packaging at 39% and 23% respectively.


Source: SupplyChainDigest

Source: SupplyChainDigest

For manufacturing companies looking to outsource core areas of the supply chain process, there are both cautionary tales and success stories. The key is to ensure that the manufacturing business in question performs a complete and deep analysis to determine if outsourcing is the right choice.

Here are a few things to look at when making the decision to outsource supply chain operations.

Outsourcing Supply Chain Risks

  • Unexpected Costs
  • Complexity
  • Loss of Control (Quality)

Outsourcing Supply Chain Benefits

  • Cost Reduction
  • Leverage Resources Better
  • Improve Customer Satisfaction

The increasing costs of managing a complex supply chain due to outsourcing is one of the risks that’s sometimes overlooked. At first glance, the thought of reducing costs on operations may seem very attractive. The added complexities with outsourcing may call for integrated supply chain technology systems that are geared towards increasing visibility and maintaining control.

At the end of the day, it is clear that in today’s fast-paced marketplace manufacturers need to cut costs and satisfy customer demand simultaneously. Outsourcing supply chain processes, especially in the areas of distribution and logistics, may be inevitable, however, making outsourcing decisions in a way that does not compromise existing company values isn’t.