The Difference Between Production Outsourcing

Production outsourcing as a new way of production and management, in the end, what is so attractive, so that the top decision-makers are so eager? The root of the problem is that it improves on the shortcomings of traditional production methods, and has a number of advantages over traditional production methods.

Traditionally, the enterprise out of management and control needs, and product manufacturing activities and resources have been to take "vertical integration (vertical integration)" management mode: or their own line to expand their own scale, or shareholding to the supplier, seller of enterprises, the colony for its The colonization of enterprises that provide raw materials, semi-finished products or parts to form a kind of ownership relationship.

"Vertical integration" in the market environment is relatively stable, there is still a certain degree of reasonableness, while the product life cycle continues to shorten, intensified competition among enterprises, the global market is unpredictable, it reveals a variety of shortcomings: increase the burden of investment in enterprises; to bear the risk of a long capital construction cycle; forcing companies to Engage in business activities that they are not good at; directly face many competitors in each business area, and so on and so forth. The result is to disperse the resources and energy of the whole enterprise, unable to run a good core business, weakening the enterprise's competitiveness. Therefore, after the 1980s, more and more international enterprises gave up this mode of operation, the emergence of the use of external resources to respond quickly to the market demand for ideas, to win in low-cost, high-quality, early market and other aspects of the competitive advantage. It is the so-called "horizontal integration" idea. It forms a "network chain" that runs through all enterprises from suppliers to manufacturers to distributors, with the enterprise as the node. Obviously, these enterprises must be synchronized and coordinated in order for all enterprises in the value chain to benefit, so the concept of value chain management was born. The implementation of value chain management has brought significant benefits to enterprises.