In this excerpt from the book Vested Outsourcing: Five Rules That Will Transform Outsourcing, the authors explain how to write contracts that allow an outsourcing partner to profit in exchange for achieving the desired performance outcome.
Swapping commodities with other manufacturers instead of shipping internationally can greatly reduce transportation costs and boost profits. Finding the right swap partner will help you avoid the risks that are inherent in these arrangements.
When products don't sell very much, conventional wisdom calls for reducing assortments and tailoring them to local conditions. But the opposite approach—stocking small quantities of each product at every store and centralizing replenishment decisions—has been shown to increase sales and reduce inventories without raising costs.
ASICS America's single distribution center couldn't keep up with surging demand for its athletic shoes and apparel. Changing its distribution pattern and adding another warehouse helped the company manage both current sales and future growth.
In a world of increasing supply chain complexity, the "one size fits all" approach no longer works. Smart companies are segmenting their supply chains to match customers' needs —a practice that reduces costs and drives up service levels.