Outsourcing in supply chain management refers to:

Outsourcing in supply chain management is fundamentally about transferring specific internal operations or activities to external vendors or third-party service providers. This strategy allows organizations to leverage specialized expertise, reduce costs, and focus on their core competencies while enhancing operational efficiency. By outsourcing, a company can benefit from the established capabilities of vendors who specialize in certain functions, such as manufacturing, logistics, or customer service, ultimately leading to improved overall performance and flexibility.

The key advantages of outsourcing include access to a broader range of resources, reduced capital expenditure, and the ability to scale operations up or down as needed. Companies often choose to outsource functions that are not central to their strategic goals or that can be performed more effectively by others. This approach can lead to significant cost savings and improve service levels, as well as foster innovation through partnerships with specialized providers.