Manufacturing outsourcing may have slowed in some industries but is gaining ground in others, such as aerospace and defense, so complexities associated with this model will continue to be a challenge for supply chain managers, says Celestica's Hermans. The company is a leading contract manufacturer and provider of supply chain managed services.

Celestica decided to pioneer the concept of supply-chain-managed services after spending several years transforming its own supply chain. "From 2007 to 2011 Celestica built a robust platform to enable our supply chain performance and we believe we now have the supply chain DNA to help our customers achieve their performance goals," says Hermans. He notes that Celestica's $7bn supply chain operates on very thin margins. "In order for us to survive, we have to be extremely efficient, and that is what we bring to our customers - the ability to roll up our sleeves and really manage a supply chain."

Celestica also has expertise on the technology side of supply chain management, Hermans says. Celestica's cloud-based platform is based on RapidResponse from Kinaxis and supports activities from sales and operations planning to demand and supply planning to inventory optimization, using advanced analytics and what-if scenarios, he says. "This is the model we implemented at Celestica and that we are taking to our customers," he says.

Moreover, Hermans says, with managed services "customers don't have to make IT investments and go through cycles of upgrades or adding applications. We manage the applications that underpin performance so they don't have to worry about the technology component."

The market for managed services is still in its infancy, Hermans says. "But its availability is driving customers to truly look at how their core competencies and whether there are partners out there that can really help them drive supply chain performance."

Hermans says he believes supply chain outsourcing will likely follow a trajectory similar to that of manufacturing outsourcing, which began in the early 1990s. "We believe Celestica isat the forefront of this trend," he says.

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