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Outsourcing Fundamentals: The Supply Chain Analysis of Manufacturing Outsourcing Relationship

Author

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  • Yuwen Chen

    (University of Rhode Island)

  • Jiayuan Zhang

    (University of Wisconsin at Whitewater)

  • Gulver Karamemis

    (Georgia Southern University)

Abstract

This chapter presents a comprehensive review of key dynamics in manufacturing outsourcing research, focusing on the relationship between an original equipment manufacturer (OEM) and a contract manufacturer (CM). The cooperation and coopetition relationships, along with modeling frameworks for various supply chain scenarios, are discussed. We provide a seven-step analytical framework including echelons of the supply chain, players involved, outsourcing decisions, and decision sequences for outsourcing decision analysis. Demonstrations of deriving the optimal outsourcing strategies (in-house, turnkey, or consignment) are provided, identifying conditions for win-win or win-win-win outcomes. Furthermore, we include three dynamic variations, including multi-vendor and multi-client outsourcing, private information, and product differentiation, to enrich outsourcing implications. Each variation is supported by relevant articles summarizing major focuses and modeling frameworks. The chapter concludes with a general discussion of outsourcing relationships and highlights potential research areas that arise from new challenges in the changing business environments.

Suggested Citation

  • Yuwen Chen & Jiayuan Zhang & Gulver Karamemis, 2025. "Outsourcing Fundamentals: The Supply Chain Analysis of Manufacturing Outsourcing Relationship," International Series in Operations Research & Management Science,, Springer.
    • Handle: RePEc:spr:isochp:978-3-031-91845-2_2
    DOI: 10.1007/978-3-031-91845-2_2
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