The Logistics of Contract Manufacturing

Abstract

Outsourcing, or contract manufacturing, is becoming an increasingly popular alternative to in‐house production. It has wide implications for the firm. Since logistics is evolving to include inbound material movements, it stands to play a central role in this trend. Outsourcing arrangements require inventory, timing, storage, transportation and other decisions pertaining to the facets of flow control. Outsourcing, why it is used, and why logistics plays a logical role in it, are examined, some key managerial issues and concerns that outsourcing presents to the firm and to logistics are provided.

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