Outsourcing and Matching Supply to Demand

The final lesson in operational management brings together several themes: outsourcing (using external providers for business activities), the use of temporary and flexible labour, and producing to order. These strategies all address the fundamental operations challenge of matching the supply of goods and services to the level and pattern of customer demand.

Key Definition: Outsourcing is the practice of contracting a business function or activity to an external provider rather than performing it in-house.

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Outsourcing

What Can Be Outsourced?

Virtually any business function can be outsourced, but the most commonly outsourced activities include:

Function	Examples of Outsourced Activities
IT	Software development, server management, cybersecurity, helpdesk support
Human Resources	Payroll processing, recruitment, training delivery
Manufacturing	Component production, assembly, packaging
Logistics	Warehousing, delivery, fleet management
Customer service	Call centres, email support, live chat
Finance	Bookkeeping, tax preparation, audit
Marketing	Advertising campaigns, social media management, market research
Facilities management	Cleaning, security, catering, maintenance

The Value of Outsourcing