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Nowadays many organisation are outsourcing their non- core activities to an external agents Distribution is one of these activities as distribution consider as a non-core activity for many firms Although there are many advantage for outsourcing there are also risks and disadvantage in this process In this essay I would explain the term outsourcing and explain why organisations are preferring to outsource some of its functions in todays environment Also in this essay it has been tried to analysis the advantage and disadvantage of the outsourcing process and its risks towards the organisation The word outsourcing could be described as the contractual relationship with a specialised outside service provider for work traditionally done in-house Outsourcing could also be defined as the use of external agents to perform one or more organisational activities In the last decade or so there has been a trend particular among large scale companies to hand over the whole or part of the distribution function to the external agents One should emphasis that outsourcing is an issue that is not specific to distribution Many other organisational functions such as information system building maintenance etc have been outsource for many years in organisations There are different reasons for organisations outsourcing their distribution function More and more organisations today face a dynamic and changing environment This in turn is requiring these organisations to adapt Competition is also changing The global economy means that competitors are likely to come from across the ocean as from across town Successful organisations will be the ones that can change in response to the competition and changing environment In other words they will be flexibleTherefore todays organisation stand in sharp contrast to the typical bureaucratic organisations that have many vertical levels of management and where control is sought through ownership In such organisations Research and Development are done in-house production occurs in company-owned plants and sales and distribution are performed by the companys own employees To support
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