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Advantages and disadvantages of outsourcing in global context
Advantages and disadvantages of outsourcing in global context
Advantages and disadvantages of global outsourcing
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Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and management challenge is multiplied. The global nature of the company could impact important activities such as transportation, funds transfers, suppliers, distributors, accounting and information sharing. Disruption to the supply chain can significantly reduce revenue, cut market share, inflate costs and threaten production. A major disruption would have obvious impacts to profit, but could have additional intangible impacts to the credibility of the company if products are not delivered on time. Global Supply Chain Management Outsourcing labor and materials in a global market can significantly stretch the supply chain structure. This can have both positive and negative effects. Looking to different countries provides the opportunity to access different markets and find the lowest possible manufacturing costs. Many companies also embraced the Toyota Motor Corp. model of just-in-time inventory and other lean manufacturing techniques that emphasized speed and cost reduction (Bosman, 2006... ... middle of paper ... ...y plans to react to the unforeseen. Implementing good contingency plans in conjunction with a robust PDCA cycle is a great step toward success for a company in the global market place. Works Cited Bosman, R. (2006). The New Supply Chain Challenge: Risk Management in a Global Economy. Retrieved April 20, 2011, from FMGlobal: www.fmglobal.com Burnson, P. (2011, April 19). Preparing for the "unthinkable". Retrieved April 20, 2011, from Supply Chain Management Review: http://www.scmr.com/aarticles/supply_chain_risk_mitigation_moves_to_the_c-level_suite/ Chu, J. (2011, April 18). Japan's supply chain ripple effects. Retrieved April 20, 2011, from PHSYORG.com: http://www.physorg.com/news/2011-04-japan-chain-ripple-effects.html Heizer, J. &. (2011). Operations Management Tenth Edition. Upper Saddle River, NJ, U.S.: Prentice Hall.
Another key driver for resurgence of U.S. manufacturing is supply chain innovation and according to a survey by Supply Chain Digest of 340 supply chain manager in 2012 showed an important decision driver for off-shore manufacturing is speed to market. In order to reduce the time of product to market corporates leaders are locating manufacturing facilities in U.S. which enhances the ability to understand customer requirements and react quickly throughout the entire value chain when requirements change hence favor production that is slated for U.S. consumption (Ludwig & Spiegel,
Most companies chose to move their plants to locations overseas to India and China. Douglas Irwin claims, “international trade in services is in its infancy” (Hart). In other countries th...
In many cases outsourcing has proven to be beneficial for businesses. It can help a business’s management by allowing executives to focus on the core structure of the firm rather than every specific element. Production, manufacturing, or additional servic...
Outsourcing manufacturing services to a network of suppliers can provide organizations the ability to adjust the production capability upward or downward, at a lower cost, when trying to match the demand conditions. Outsourcing can also decrease the product design cycle time
The U.S. industries have been outsourcing manufacturing for several decades now. U.S. companies thought they were reducing costs by outsourcing development, manufacturing, and process-engineering abilities. Consequently, U.S. corporations’ knowledge, skilled workers, and supply chain, which are the necessities to producing advanced products, have vanished. For example, almost all notebook computers, cell phones, and handheld devices, which were once created in the U.S., are now designed in Asia. When a major U.S. company outsource, it pressures their rivals to do the same thing. They also lose the expertise of process engineering, which would interact with manufacturing on a daily basis. Minor companies and skilled workers go to where the jobs and knowledge networks are no matter where they are geographically in the world. This decline of trade in the U.S. has caused a negative chain reaction to their suppliers of sophisticated materials, tools, production equipment, and components. U.S. industries do not have a way of coming up with new ideas for the next generation of high-tech products...
One of the most popular reasons jobs are outsourced is for cost savings. A company can benefit from saving on the cost of labor and on U.S. taxes. Businesses also benefit in receiving top talent for a lower cost. Out sourcing has made the talent pool a global one, providing access to people with specialized skills. This can result into efficient, fast results, expediting the supply chain process as stated by Rajesh Rao in the “The Other Side of Outsourcing.”
The current trends in emerging markets have led companies to centralize production of imperative product parts. Although outsourcing may have been beneficial in the past, bring production “close to home,” allows companies to have more control over the production process. More control over the processes translates to more control over the product. Customers demand higher quality at a lower price, so companies have to do whatever is necessary to compete.
In light of recent growth of domestic and foreign countries outsourcing and off shoring over seas, companies been taken advantage of the cheap labor cost for outsourcing and off shoring manufacturing. Competitive business investing in domestic and foreign manufacturing have affects every part of the business industries from design, software development, finances and logistic management, i.e., customer and sales. Nevertheless, outsourcing been praised by businesses for outcomes of cost-effectiveness, efficient, productive and strategic, but damned as malicious, because of companies’ greediness, detrimental, and brutal in the public eyes.
... important and worth mention reason for firms to involve in supply chain conducts is in reaction to pressure and threats from competitors, both domestic and internationally. High level of supply chain activities occurs when the strategies at each of the firms authentic with on the whole supply chain strategies. Each firm must recognize its job in the supply chain, the requirements of the final customer, and how these requirements are translate into internal operations needs and the needs being placed on suppliers. Manufacturers are required to better supervise the supply chain and to get better manufacturing competence and logistics operations although remaining reaction to altering market situation and customer demands. And increase the complicated global contact between suppliers, manufacturers, distributors, retailers and consumers join together these pressures.
...pital resources like distribution vehicles and storage warehouses should be outsourced to help reduce the high cost of operation which in turn can lead to reduction of its products price. The company should concentrate on product development and evolution and delegate distribution roles to outsourced firms. Such initiatives have worked well in the new Indian market and should be implemented in other areas.
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
Every firm has to make important decisions regarding the production process of a product. Different firms have distinctive production strategies and the main goal is to maximize efficiency as well as financial growth. One important decision that every firm needs to make is to either outsource or insource the production of a product, or parts of a product. Outsourcing and insourcing are techniques of dispersing work among alternative departments or companies for strategic reasons.
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
The outsourcing decisions may change the operation strategy of the firm sing in the manufacturing and service sections. A firm choose to outsource the business activities not only just due to lower the operating costs, it is possible it due to lack of the technology capability, lack of expertise at the particular area, seek for the better service quality vendor, lack of capacity for expansion and lack of internal capacity in meeting production ramp demand. This paper has found out the four independent variables to measure whether the independent variable which is outsourcing decision will bring effects to each of the variables. As the result, outsourcing will reduce the operating costs by reduce the in-house department, overhead and fixed cost, and capital investment. Besides, outsourcing the business activities may help the organization to explore the new market segment and gaining the new customers which may boost up the profitability. A firm which outsource their department to other countries may gain access to the world class capability since they may find a partner who are expert in that particular area. It is not only gain access to the new technological knowledge, it is even help the firm to improve competitive advantages to compete with
19. Sodhi, Sunil Chopra and ManMohan S. Managing Risk to Avoid Supply Chain Breakdown. MITSloan Management Review. [Online] October 15, 2004. [Cited: February 25, 2010.] http://sloanreview.mit.edu/the-magazine/articles/2004/fall/46109/managing-risk-to-avoid-supplychain-breakdown/.