Certified Production & Operations Manager (POM) Practice Exam

Approximately what proportion of outsourcing agreements fail?

1. One-quarter

2. Half

3. Three-quarters

4. One-tenth

The correct answer is: Half

The choice that indicates approximately half of outsourcing agreements fail is rooted in various studies and industry reports highlighting the challenges organizations face when they enter into outsourcing arrangements. Factors contributing to this high rate of failure include a lack of alignment between the outsourcing provider and the client’s expectations, inadequate communication, mismanagement of contracts, and unforeseen complications that arise during implementation. The statistic reflects the complexity of managing outsourced operations, which often require robust frameworks, clear communication channels, and strong relationship management to be successful. Additionally, organizations may underestimate the cultural differences or overestimate the capabilities of the outsourcing partner, leading to misaligned objectives. Recognizing that around half of these agreements do not meet their intended outcomes emphasizes the critical importance of due diligence, ongoing oversight, and strategic planning in outsourcing relationships. Understanding this statistic is crucial for those involved in production and operations management, as it highlights the significance of careful management and ongoing evaluation of any outsourcing strategy to enhance the chance of successful outcomes.