Outsourcing supply chain surplus

Recall that the supply chain surplus is the difference between the value of a product for the customer and the total cost of all supply chain activities involved in bringing the product to the customer. Our basic premise is that outsourcing makes sense if it increases the supply chain surplus (assuming we get to keep some of the increase) without significantly inCTcasing risks. A sourcing decision should aim to increase the net valne created by the supply chain. 

One instance in which a firm may outsonrce to a third party even when none of the mentioned factors suggests outsourcing is shortage of capital or a third party with a much lower cost of capital. In either of these scenarios, the third party can grow the snrplns by bringing lower-cost capital to the supply chain. This discussion on how and when a third party can increase the supply chain surplus is summarized in Table 15-1. 

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