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Volume 30, Issue 1

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Thursday, 12 December 2013 17:09

How Much Can You Outsource a Risk?

A common corporate credo nowadays is: ‘make only what you cannot buy’. The idea is that if a supplier is already making an affordable, quality component or product, there is no sense in re-inventing the wheel. The company would be better off using its internal resources to develop more strategic advantages related to its core differentiating competences. Similarly, corporate activities such as accounting, logistics and procurement can also be handled by third parties offering different benefits to the purchaser – sometimes, but not always, in terms of cost reduction. But in such cases, does the purchasing company’s risk go down or up? And to what extent is it still responsible for the outsourced activity?