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Put it in Writing: Sharpening Contracts Management to Reduce Risk and Boost Supply

Having great performance from an outsourced supply chain is really not possible without a strategic approach to contracts management. Similarly, true supply chain security requires a more sophisticated contracting methodology. There are five ways to start professionalizing your approach to outsourcing contracts.

By ·

Gone are the days of managing supply chain performance without having strong written agreements in place. Handshakes and good intentions and long-term trusted relationships may have sufficed in earlier times, but in today’s frenetic, volatile, global business environment, they leave businesses exposed to significant risks.

The challenges are exacerbated by elevated levels of outsourcing. True, outsourcing as a business practice is not new, but the extent to which it has evolved, and the range of business practices now involved, are what create cause for concern. It is not uncommon for companies to contract with third parties for some or all of their supply chain services, ranging from inventory management and packaging to transportation and logistics management. That’s particularly true when supporting an international customer base.

Indeed, numerous studies have identified outsourcing as a hallmark of successful companies. PwC’s Global Supply Chain Survey 2013, incorporating responses from 500 supply chain leaders in North America, Europe, and Asia, reported on the top-performing companies as follows: “The leaders typically outsource about 60 percent of their warehousing and logistics activities and nearly 50 percent of their manufacturing and assembly activities.”

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By ·
Download Article PDF

Gone are the days of managing supply chain performance without having strong written agreements in place. Handshakes and good intentions and long-term trusted relationships may have sufficed in earlier times, but in today’s frenetic, volatile, global business environment, they leave businesses exposed to significant risks.

The challenges are exacerbated by elevated levels of outsourcing. True, outsourcing as a business practice is not new, but the extent to which it has evolved, and the range of business practices now involved, are what create cause for concern. It is not uncommon for companies to contract with third parties for some or all of their supply chain services, ranging from inventory management and packaging to transportation and logistics management. That’s particularly true when supporting an international customer base.

Indeed, numerous studies have identified outsourcing as a hallmark of successful companies. PwC’s Global Supply Chain Survey 2013, incorporating responses from 500 supply chain leaders in North America, Europe, and Asia, reported on the top-
performing companies as follows: “The leaders typically outsource about 60 percent of their warehousing and logistics activities and nearly 50 percent of their manufacturing and assembly activities.”

SUBSCRIBERS: Click here to download PDF of the full article.

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From the November 2018
The combined forces of a strong economy, e-commerce growth and a tight labor market are making it more important for distribution center (DC) operations to find ways to make their existing infrastructure and people more productive. Software and automation continue to prove to be a vital part of the solution.
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Global Kuehne + Nagel Indicators Signal Global Supply Chain Resilience
So far this year, international merchandise trade has risen by 10.6%. Emerging markets and North...
A.T. Kearney’s Global Business Policy Council Predictions Released
GBPC’s 10 major predictions, fleshed out in the study, are based on continuous scanning of the...

New Research Indicates Greener Supply Chains Mean More Profit
Transparency is key when selecting new suppliers as 85% of businesses want to achieve a...
New Survey Measures Potential Impact of Tariffs on U.S. Supply Chains
The proportion of total output produced abroad is meanwhile expected to rise very marginally.