The risks of outsourcing

The benefits of outsourcing can be substantial; however, some high-profile debacles have shown how risky the process can be. This article highlights the outsourcing mistakes made by Boeing during the 787 Dreamliner megaproject, which was nearly three years off schedule and over budget by US$12 billion. It identifies the supply chain for the Dreamliner, which ranged from the United States to Japan, South Korea, England, and Italy. It then discusses the importance of risk-mitigation strategies and plans. The article includes five tips to help mitigate the risks and reap the rewards of outsourcing: (1) making sure that you and the vendor understand each other; (2) managing your knowledge; (3) condensing your efforts strategically; (4) asserting some control, without being controlling; and (5) minding the schedule. Accompanying the article are two sidebars: the first one identifies the supply chain for the Dreamliner; the second one discusses nearshoring.
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