The outsourcing of manufacturing is a strategic option which in some cases represents a choice and in others a competitive imperative. In this article, the authors explore the approaches of sample firms in the chemical and automotive industries to the outsourcing of manufacturing. Based on clinical research done with companies participating in IMDs Manufacturing 2000 project, the authors conclude that the outsourcing of manufacturing is not a panacea, but rather a strategic choice, which is business dependent. In the cases where it is pursued, the need for firms to focus on the managerial challenges of selecting appropriate partners for the long term and building and nurturing a mutually rewarding relationship is stressed. Setting and realizing an aggressive improvement agenda is required by each partner to make the necessary transformations to sustain the relationship in the long term.
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