Outsourcing Model threat to Supply Chain Visibility
According to a survey conducted by Industry Directions Inc. and the Electronics Supply Chain Association (ESCA), the presence of electronics outsourcing is resulting in loss of control and visibility for companies across their extended supply chain. The survey results, which were released recently, indicate that both original equipment manufacturers (OEMs) and service providers have suffered a serious loss of visibility over their supply chain activities.
About 69 percent of respondents said they have less control over at least five of their key supply chain processes due to the outsourced model, while about 66 percent of providers feel their aggregate risk with customers is high.
Also, there has been an increased risk of uncertainty with the outsourcing model. This was conformed by about 36 percent of respondents, who reportedly felt an increased risk of uncertainty. Further, about 62 percent of respondents described as "problematic" at least two core trading partner management practices, which include performance management and consensus on results.
While the largest portion of respondents indicated that shared risks and objectives are the most effective form of trading partner agreements, they are the least used. In fact, outsourcers perceive increased cost from sharing risk. Some 40 percent of all respondents encounter resistance to sharing risk, according to the research.
Read More: Outsourcing Hurts Supply Chain Visibility
Subscribe to the comments for this post