Outsourcing meant that brands could push inventory and costs off their balance sheets, as well as deal with cost issues more flexibly. The increased fiscal responsibility this approach enforced all along the line made this very popular. Increasingly, companies are moving away from one organization building the entire product. These efforts were originally driven by top of the pyramid, by the company which originally made the complete product. However, outsourcing will have negative results if a company can't coordinate production of materials it needs to create its product.
Most industries are partially dependent on suppliers to produce their products.
If there are demand swings, the chain may not be able to respond, resulting in inability to match market demand as quickly as competitors can. The concept of automated supply chains is a response to restore some benefits of pre-supply chain functioning to an outsourced relationship, and permit globalized, distributed systems to take economic advantage of world markets. Setting up a supply chain means automating many aspects of the supplier relationship, including functions such as Engineering, Production, Inventory, and of course, Procurement. The advantage is that you can work with any supplier, and if a particular supplier does not add value, you can remove it from the chain. This comes at a time when markets demand ever closer synchronization of business processes.