The production of a good or service frequently requires that the supplier performs a wide range of activities. The coordination between those activities implies that the firm must determine its boundaries, which means that it must define the supply chain activities that will be performed internally, and those that will be trusted to external suppliers. The process of obtaining goods and services from outside suppliers, instead of developing them within the organization, is called outsourcing (Anderson & Naurus, 1991).
Key Terms in this Chapter
Partnership: The act of creating a process of cooperation between agents of the value chain (supplier-suppliers; supplier-customer).
Supplier: The part that provides inputs (material, products, and services) to feed the value chain of the enterprise.
Customer: The direct beneficiary of the activities developed by the value delivered by the chain of activities of the enterprise. Customers can be internal to the enterprise or external when directly related to the market.
Strategic Outsourcing: The strategic decision of planning the organization based on partnerships with external suppliers of goods and services, instead of developing them within the organization.
Value Chain: The whole set of productive activities of an enterprise, including its relation to third parties.
Outsourcing: The process of obtaining goods and services from external suppliers, instead of developing them within the organization.
Vertical Integration: The strategic decision of planning the organization based on having all supply of goods and services developed within the organization.