What is Outsourcing?
Outsourcing: Hiring outside firms to do part of the work.
Where Outsourcing fits
Outsourcing is part of Operations in Management. Operations turn inputs into outputs. Find the bottleneck, cut waste with lean methods, outsource non-core work and use economies of scale as volume grows.
Practical tip
Improve the slowest step first; speeding up others changes nothing.
Related terms
- Bottleneck
- The step that limits a whole process's speed.
- Economies of scale
- Average cost per unit falls as output grows.
- Lean manufacturing
- Cutting waste in production while keeping quality and value.
- Capacity planning
- Deciding how much output a business can handle.
- Standard operating procedure
- A step-by-step guide for routine tasks.
- Process mapping
- Drawing the steps of a workflow.
- Waste reduction
- Cutting activities that add no value.
Formulas you will use with it
Test yourself
Which term means: “Hiring outside firms to do part of the work.”?
Bottleneck · Outsourcing · Lean manufacturing
Answer: Outsourcing
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