Global Supply Chain Outsourcing Strategy Research

As globalization is getting the world smaller and more closely connected, the market becomes increasingly diversified and individualized. Businesses are in a completely different situation since the beginning of this century, where the advantage of a company comes more from its quick response to the market change in addition to traditional factors such as quality, price and after-service, a consequence of shortened products lifecycle caused by fast changing demand and advancing technology. To sustain its market share, companies will have to develop popular new products as soon as possible to meet customers’demand. Though each company has its core competitiveness (quality, cost control, production cycle), it will have to co-operate with relevant firms of the whole supply chain to make the prompt response to the market change, due to the limited resource of each firm and the limited time they are left with. As the traditional strategy of integration becomes inappropriate under the dual pressure, companies begin to consider outsourcing as an alternative strategy, to focus on upgrading their core competitiveness while outsourcing some sector they have less competitive advantage, in order to improve the their overall competitiveness and that of the entire business. A close cooperation with the outsourcing service providers and a multi-win business model, are the only choice that a company has to sustain in the ever changing market.The consumer products manufacturers are heavily affected in the market change, because their products have to meet various people’s diversified and fast changing tastes. As long as cost or risk control is considered, outsourcing seems to be a good option. But is it a panacea? Given the related theory of economics and management, this article argues that outsourcing strategy is imperative through the analysis of its overall advantages and disadvantages based on supply chain development. The article makes a comprehensive analysis of company P, a typical retail products manufacturer, reveals its supply chain structure, together with its product and business modes. The article proposes the strategy of outsourcing as a solution to company P, after the research of self-producing and outsourcing strategies in many sectors and on different products. The article further gives advices on every step company P should adopt in restructuring its supply chain with the strategic frame, with the purpose of providing a model for managers of similar firms.