Reeling In Outsourcing: Evaluating Supply Chain Risk And Reward Under Economic Uncertainty

Abstract

In todays climate of economic uncertainty, companies that have relied on outsourcing in the past to curtail costs are increasingly reeling in their outsourcing decision to more appropriately balance supply chain risk and reward. This paper provides a review of the literature on reversing supply chain outsourcing and frames the sourcing decision in terms of multiple options, including multi- sourcing, near sourcing, and in-sourcing. A decision tree model is presented to aid the decision maker in evaluating the expected value of various sourcing decisions when risks and returns are explicitly considered. Trends and conditions that influence the outsourcing decision are also discussed.