When would a company decide to outsource a supply chain function?

A company typically decides to outsource a supply chain function during the design phase, when strategic decisions about how the supply chain will be structured and which capabilities are needed are being made. This phase involves assessing core competencies, resource availability, and determining which functions can be effectively performed in-house versus those that may benefit from the expertise of third-party providers.

Outsourcing decisions made in the design phase can lead to significant improvements in cost efficiency, flexibility, and access to specialized skills or technologies. Companies assess various factors, such as the strategic alignment of the outsourced function, potential cost savings, and the ability to focus on core business activities by leveraging external partners.

In contrast, outsourcing decisions made in the planning, execution, or operation phases may often respond to immediate needs or tactical concerns rather than a comprehensive evaluation of long-term supply chain strategy. The design phase provides the crucial foundational framework for these subsequent activities, making it the most pertinent time for such outsourcing considerations.