Sequencing Strategies and Coordination Issues for Outsourcing and Subcontracting Operations

Managing the supply chain has recently been the most significant task for manufacturing companies toward cost efficiency and customer satisfaction. Globalization not only increased the size of supply chains, but also created an environment where competing suppliers, manufacturers, and distributors need to cooperate. Even when firms own a significant portion of their supply chain, multiple parties with different performance measures and goals are involved in the decision-making processes. Examples from the automotive industry include General Motors, Ford Motor Company and others. Each division in such organizations tries to reach optimal plans for the portion of the overall system under its authority. However, the extent to which the individual goals are achieved depends on the decisions made by other parties involved in supply chains. Therefore, the quality of the strategic decisions made by such decision makers depends on the amount of information they have regarding other members of the supply chain. The more information is shared among the decision makers, the greater the resulting coordination benefits