Write a response to the following scenario:

As a certified Project Manager, I was particularly interested in the role both the suppliers and REI’s internal Project Managers played in REI’s efforts to outsource supply chain management. REI outsources their supply chain management to a dedicated third party SCM vendor. REI attributes the success of their SCM outsources effort directly to the various suppliers making one of their project managers available to ensure that the needs of the supplying organization were adequately represented. During REI’s SCM outsourcing efforts, the retailer noted that standardization across all of the various suppliers would have been impossible without these Project Managers on both ends. REI PM’s examined the company’s supply chain and determined that they were spending an excessive amount of money shipping heavier items to distribution centers first and then shipping them from the distribution centers to each of its 60 stores. REI PM’s concluded that it would be more cost effective to ship the heavier items directly from the suppliers to their stores. However, direct shipping created challenges for the receiving staff at the individual stores, and smaller vendors didn’t have access to the higher end inventory management systems required to manage the supply chain directly. By outsourcing to a third party, REI was able to overcome those challenges because the supply chain management vendor provides those capabilities to the smaller suppliers centrally. REI’s decision to outsource supply chain management to a third party provider allowed them to simplify the entire process. Additionally, once all of REI’s suppliers were operating from the same system, the errors and over-shipping problems dropped dramatically. REI also noted a significant drop in internal receiving labor. The cost was also distributed across all of the suppliers, which reduced REI’s initial capital outlay. My take away from REI’s experience outsourcing their supply chain management effort is that it gave the company the ability to manage both orders and order fulfillment from purchase all the way through delivery. I tend to agree with this particular outsource decision. Deciding whether or not to outsource is not an easy decision, but in this case, it allows REI to focus on their core retail competency and outsource the activities not natively in their wheel house.

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