Supply Chain Co-ordination

Abstract

This chapter looks at the strategic implications of particular questions about procurement and distribution: namely, whether other firms should be paid to provide the goods and services required or whether they should be provided in-house. The chapter first describes the main issues, and then turns to a fairly abstract discussion of the nature of the choices involved, using the perspective of transaction cost theory. This is then used to underpin a critical look at the decline of in-house provision which has been common during the last two decades of the twentieth century, in a section which also considers the strength of some of the claims which are made from time to time to justify in-house provision. Finally the chapter turns to outsourcing, or market procurement, to re-emphasise the strategic significance of some decisions.