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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.

Before you pick a location for a manufacturing plant overseas, consider the impact of foreign enterprise income taxes.

Yogurt maker Stonyfield Farm's initiative to shrink its carbon footprint offers a possible model for other companies that are concerned about their supply chains' greenhouse gas emissions.

Supermodeling allows a company to take an end-to-end view of its supply chain and make adjustments in production, distribution, and inventory practices to meet changing market demands.

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.

A four-part approach to creating flexible supply chains is helping the construction industry in the United Kingdom respond better to economic downturns —and recoveries.

If companies are to generate savings from "green" initiatives, they need to take a total-cost-of-ownership view and throw out old assumptions underpinning common supply chain practices.