Journal Article Review 1- Week 2
Ferreira, J., & Prokopets, L. (2009). Does offshoring still make sense? Supply Chain Management Review, 13(1), 20-n/a., pp 1-5, Retrieved from http://search.proquest.com/docview/221135949?accountid=12085
In this paper I will summarize the article, discuss the purpose intended by the authors, and discuss how this situation relates to the supply chain management theory. I will also suggest areas in offshoring where research done since its publication will enhance the findings by the author and serve as additional options for improvement.
Article Summary Ferreiara &
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The authors also write about the inability to no longer be able to customize products and services to customer needs due to shipping container space limitations and month long order times limiting flexibility and responsiveness of supply chains (p. 1). They went on to say that due to these inflexible supply chains customers would no longer be able to receive goods, services, and products tailored to their needs although I did not find conclusive enough evidence in the writing to agree with its inclusion. I believe this portion of the article was an attempt to persuade the reader by using examples of possible frustrations customers would experience. Although these issues may be true, I did not see the research necessary to support the claims. Ferreiara & Prokopets go on to write about the actual costs consuming companies by providing a list of increases associated with offshoring. Topping the list were ocean freight costs which have risen by 135% (p. 2). At first reading of the article it is conceivable that the authors are building their case to show the negative impacts of offshoring but the reality here is that these prices fluctuate often and can change day to day. These price range increases were indicated to be from 2005-2008 but there is also research that suggests the prices have
25. What are the merits of outsourcing the performance of certain value chain activities as opposed to performing them in-house? Under what circumstances does outsourcing make good strategic sense?
The Reshoring Initiative is focused on helping companies shift collective thinking from “offshoring is cheaper” to “local reduces the total cost of ownership.”
Offshoring is one of the reasons behind the recent unemployment hikes. Roughly 3 million jobs were offshored in 2015 alone (“Number of U.S jobs moving offshore”). Simply put, offshoring is when a company decides to purchase products or services from a third party; usually
It was clear to management in GSD that although these numbers are very compelling and give the company an opportunity to save a vast amount of money, offshoring would still be a very sensitive decision. Historically, the benefits of free trade had been premised on the logic of comparative advantage. Management at GSD wondered whether the concept of comparative advantage was losing its relevance as an argument in favor of free trade. The question was put forth that, if free trade simply transferred jobs, where would the new jobs come from to utilize the skills of highly trained displaced developed world workers who had grown accustomed to high levels of pay? In 2003, a newspaper article commented on a political debate related to offshoring jobs of radiologists from the hospital of Massachusetts General Hospital. It stated, “The hospital would beam images electronically from some scans to India, to be worked on by radiologists there”. As one would expect, US radiologists were up in arms over this. “Who needs to pay us $350,000 a year if they can get a cheap Indian radiologist for $25,000 a year?” (Who’s Reading Your X-Ray, The New York Times. Nov. 16, 2003). This is the exact view that GSD would not like to portray. Their reputation both internally as viewed
The offshore activities bring consequences in the capital markets. From offshoring benefits: reducing costs and improving productivity, the organization could
Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. (Investopedia) Outsourcing jobs has become increasingly popular in the economic realm of the world since the mid-20th century and has since then become a more controversial topic. The United States economy has been under the microscope for the last 4 years due to the economic recession. In today’s global business competitive environment, companies must find innovative ways that adapt to new strategies to sustain revenue generation, while also remaining competitive. This paper gives the effects that I have found to be most pertinent to the ongoing debate over outsourcing jobs, and how it can affect the U.S economy.
To take on these competitive challenges, corporations are outsourcing to specialized companies that can use their capability to increase the efficiency of an outsourced function (Burt, 2010). Outsourcing has become so common that it is listed as one of the five basic forms of collaboration among supply chain participants (Bowersox, 2010). However, over the past several years there has been a surge of outsourcing taking place in the United States and abroad and this trend has added a new dimension to procurement (Burt, 2010). Today, procurement is used as a competitive weapon that differentiates successful, highly profitable companies from others within the same commerce. (Simchi, Kaminski, Simchi,
Many business executives believe "offshoring" to be the destiny of any company that wants to remain competitive. Labor costs can be reduced by 25-30% or more, and companies across the country are doing it. How can responsible corporate officers not consider the offshoring option for their companies? But what are the real benefits and the pitfalls of offshoring? When does it make sense to pursue outsourcing, and how can you safely take advantage of lower cost resources in other countries without risk or loss of quality?
The primary factor of offshoring is the cost differences comparing between Australia and the offshore countries (Holmberg et al 2006, p. 1). Offshoring assists Telstra to diminish overall transaction costs and labor costs by operating certain business activities at offshore locations at a lower cost. The capital costs on the technological and organizational expertise at the beginning when Telstra offshores must be required, however, the
In this paper the negatives and positives of offshoring are discussed. Offshoring has become a way of life for many businesses. It is widely accepted that offshoring is a strategic business decision. Many organizations are taking advantage of these opportunities because of the benefits to them and their customers. In order to compete with other companies many businesses are finding it necessary to outsource to other countries. Offshoring has produced some economic benefits but it has also created problems such as, work performed in remote areas that fail to meet quality standards, exploitation of workers, and lower environmental standards, especially in developing countries. These standards may damage the local environment or pose health
Offshoring is the relocation, by a company, of a business process from one country to
As more companies expand their business globally, they are seeing more opportunities and an increased set of threats to the market. Threats like war, political revolutions, new currencies, and natural disasters can affect growth and political stability throughout the world, so in order to successfully compete in the international market more companies are faced with the decision of relocating part of their operation offshore. This paper will address what key elements companies in this situation need to address, such as, quality of customer service provided, security of confidential information, and the possibilities of cost savings, in order to be sure that outsourcing is the best solution for their company.
This strategic report of ANZ’s offshoring strategy examines the effectiveness and drivers of ANZ’s decision to move towards outsourcing internationally, analyses the impact of ANZ’s offshore programs on stakeholders, explores key risks and opportunities and evaluates the success of ANZ’s offshore system.
Offshoring is the practice of relocating business processes to lower cost locations outside the country of origin. This is not a new practice for companies in the United States. Moving business processes to another country to take advantages of lower operating costs and cheap labor seems like a great idea. However, the dilemma for a company is whether the benefits of offshoring outweigh the risks. This dissertation will begin by briefly reviewing the history of offshoring. Next, it will examine the various advantages and disadvantages associated with offshoring. Thirdly, it will explore the growing trends of backshoring and nearshoring in situations where
Many complex and more diverse decisions confront supply chain managers on a regular basis: what would be more efficient to manufacture in-house or to outsource; what new channels to implement that it would benefit their customers and suppliers, or how all new technologies, platforms, and practices have to be aligned to enable real-time supply chains. Current information technology reduced outsourcing transaction costs drastically, enabled companies to an increased supervision and control over offsite work, and outsourcing services can deliver faster and more convenient, but technology alone is not the solution. If a company decides to embrace changes in business processes and business culture, those changes can support a long way toward delivering a better product for less money. Complex sphere of activities in many countries is not relevant anymore because a massive number of activities outsourced became commonplace, a new normal.