Product Outsourcing: Are you taking advantage?

By Mohan Sivahari

“Do what you do best. Outsource the rest”

Peter Drucker (Author, Management Consultant, Educator)

If there is one business model that is ubiquitous across every industry, it is product outsourcing. Although the oldest form of outsourcing dates to the 18th century with the shipping industry outsourcing work to local crew members, the advent of information technology has pushed the limits of outsourcing to new heights. Today, practically every product we buy and every service we use has some flavor of outsourcing driving it from the backend.

Product Outsourcing Benefits Product Development

With global product development, companies that own the intellectual property for their products often resort to outsourcing the manufacturing of major components of their product.

There are different product outsourcing relationships between an Original Equipment Manufacturer (OEM) and an external company
Infographic explains the different product outsourcing relationships between an Original Equipment Manufacturer (OEM) and an external company

Regardless of what the product outsourcing model is, the key element of this relationship is the exchange of data, primarily engineering related data, to collaboratively develop the final product. Any Product Lifecycle Management (PLM) application out there supports the management of product data; but companies who are heavily invested in outsourcing need to push the boundaries of collaborative product development to include their partners. Many companies struggle to realize their digital thread and digital twin vision especially when it comes to working with external entities. Despite the connected workplaces we see across the globe, there is always a degree of separation between an OEM and its supply chain. Sometimes it is intentional and other times it is due to a lack of solutions to offer that seamless collaboration with external users.

Outsourcing Solves Business Challenges

Are you a PLM customer or considering PLM soon? Do you rely heavily on outsourcing and collaboratively developing products with outsourced partners? Are you experiencing costly delays due to over-the-wall exchange of data with your partners? Do you constantly iterate on your product design with inputs from your partners? Are you struggling to realize your digital thread vision with your partners

We are here to help!! Stay tuned for part 2 of this blog series!

“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business”

Lee Kuan Yew (First Prime Minister of Singapore)


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This article first appeared on the Siemens Digital Industries Software blog at