Titan - The Outsourcing Journey

The materials management department coordinates the outsourcing initiatives in an organization. This covers the complete cycle of material flow from the purchase and internal control of production materials to the planning and control of work-in-progress and distribution of the finished product.

Before deciding in favor of outsourcing, it is essential for organizations to identify, exploit and protect their core businesses. They should retain or insource those manufacturing functions that are critical to the product and those the company is distinctively good at making. Thus, only those manufacturing functions should be outsourced in which the suppliers have a distinct comparative advantage, for instance in terms of greater economies of scale, a fundamentally lower cost structure or stronger performance incentives. Most importantly, it is necessary to use outsourcing proactively through a stronger focus on internal core business areas, as a way to improve manufacturing performance by generating employee commitment at all levels (Refer Table II & III for the essentials and perils associated with outsourcing).