Outsourcing Benefits and Risks Benefits Economies of scale-reduce manufacturing costs Risk pooling -demand uncertainties are transferred Reduced capital investment Focus on core competencies Nike focus on innovation,marketing,distribution,and sales,not on manufacturing Increased flexibility Better react to changes in customer demand Use the supplier's technical knowledge to accelerate product development cycle time Gain access to new technologies and innovation These three issues are critical issues in industries where technologies change rapidlyOutsourcing Benefits and Risks „ Benefits „ Economies of scale - reduce manufacturing costs „ Risk pooling - demand uncertainties are transferred „ Reduced capital investment „ Focus on core competencies „ Nike focus on innovation, marketing, distribution, and sales, not on manufacturing „ Increased flexibility „ Better react to changes in customer demand „ Use the supplier’s technical knowledge to accelerate product development cycle time „ Gain access to new technologies and innovation These three issues are critical issues in industries where technologies change rapidly