Products and services to be procured from outside organisation purely depends on the business model perspective and firms strategy. Buy or make decision is very crucial and it is applicable on the service part as such .ideally a form.shpild concentrate on their core competency area and they should outsource the rest of them ( like a management consulting firm has a core competencies on business consulting and they maintain and develop skills and resource based on that and they will outsorrce their finance or HR fucntionalities.). In service sector also usually manufacturing companies will outsource their storage and distribution to thir party service providers which reduce their risk involved in that operation part and from the cost point of view also it is much economical.
Contract types depends on the various factors such as level of services and type of business involvement with the service providers and original parts manufacturers. Some would be shared facilities and strategic alliances with some firms and some would be contract based on per ton production or per.volume.productoon based on the order or estimated demand given. In logistics service contract can be based on per square area for storage or per kg or per km distance travelled for distribution of products to the next supply chain level Industry to industry the contracts will change .some may be even on profit share or gain share model ( especially for FMCG products) where the margins are less and business is driven through economies of scale.( Huge volume sales)
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