BENEFITS OF OUTSOURCING IN SUPPLY CHAIN MANAGEMENT
written by: Lauren Mercer
MKTG 3130 – Final Term Paper
TABLE OF CONTENTS
I. Supply Chain Management and Outsourcing ………………………………………… 2
II. What is Outsourcing …………………………………………………………………. 2
III. Important Processes Related to Outsourcing..………………………………………. 3
IV. Advantages of Outsourcing …………………………………………………………. 4
V. Disadvantages of Outsourcing ………………………………………………………. 9
VI. Current Changes in Outsourcing …………………………………………………... 11
VII. Outsourcing Works …………………………………..…………………………… 13
I. Supply Chain Management and Outsourcing Supply chain management is a horizontal process that crosses the company and spans countries in scope. Time, distance and the nuances of operating in a
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By shifting work to a lower cost organization within a business’s region value is added by the flexibility, quality improvement, cost reduction, and enhanced commitment to core business. Multisourcing was first introduced in 2005 by the market/technology research firm, Gartner. It is a blending of business and information technology services from the optimal set of internal and external providers in the process of achieving business goals. In other words, it is a strategy that treats a given function as an array of activities, some of these which should be outsourced and others that should be performed by internal staff. Although the term may apply to any business area, it is most commonly used within the context of information technology. Strategic outsourcing allows not only the transfer or control to an outsider, but also the method of manufacture, allowing the use of a different technology or process. A company that uses strategic outsourcing may choose to transfer an entire product, product line, or an entire plant to gain strategic value. Overall the concept is the same as outsourcing, but goes more in depth with its definition.
IV. Advantages of Outsourcing Almost every organization outsources in some way. Before jumping headfirst into outsourcing an organization must be aware of the impact it will have on the business itself. In order to find out if outsourcing is the right
Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,
Outsourcing has become an integral part of many organizations today. Outsourcing has its advantages and disadvantages that organizations will have to weigh to decide whether or not outsourcing is the best possible solution to their current problems and business operations. Outsourcing refers to the process of hiring external provider to operate on a business or organization function (Venture Outsource, 2012). In this case, two organizations or businesses enter a contract where there will be an exchange of services and payments. This paper will discuss the possible risks an organization may encounter in outsourcing in relation to the use of an external service
The vendors are investing in their employees by various training programs on different technologies. This gives a chance for the vendor to provide the outsourcing services to a company with the help of the well trained employees who are ready to work on the projects. Before outsourcing some of its products and services to a third part vendor, the company has to analyze all the factors that might result from the outsourcing decision, the advantages and disadvantages of the company both in short term and long term due to outsourcing. According to Aubuchon, outsourcing some of its products can be a good thing for a company and the judgment to outsource the services must not only based on the cost factor, but the company has to take all other significant factors into consideration (Aubuchon, 2014).
Outsourcing is a very common practice for companies. They purchase goods and services from outside their company in pure market fashion. Companies will search for the best priced supplier every time in order to keep costs down. Smaller companies may outsource a lot of their operations ‘Few Companies will have the expertise or the inclination to create, make and market their products by themselves. Companies will focus on what they do
outsourcing, there are several steps involved. In order to be successful in outsourcing, all steps must
By this contemporary time, outsourcing has become an inevitable trend in the global business and most of multinationals and entrepreneurs are attracted by its privileges. It has been contributing in global transformation of business as a new business strategy and jumped in international popularity since a decade. Although it is a broad phenomenon the objective of this essay is to describe the scope of outsourcing with its major advantages and disadvantages.
The challenges for outsourcing are many as there are two different companies working together. The risk of something going wrong is based on whether the communication between the two is good. Communication is the most important part of the cooperation between the two companies.
As mentioned earlier outsourcing forms a part of decentralization structure. This concept of Outsourcing originally came from “American Glossary” in the year 1981. Outsourcing offers cost-effective benefits along with non-economic benefits. Outsourcing is a process of delegating a business-process of a company to a third company, leveraging benefits of reduced costs, improved quality and innovations. Outsourcing/ Downsizing became the most prevalent business trends. A very commonly considered reason for outsourcing is reduced costs, where specialized providers are more efficient and economic than a vertically integrated organization. Some organizations found it more affordable to access a few key resources from other organizations then to have an in house department working on the same. Organizations benefit from outsourcing non-core activities especially when they work in a dynamic business
Outsourcing a business is a risky affair. Handing over control to another company who might do a better job of the outsourced process, probably for a lower cost, but there is also a chance it will get things wrong. And if something goes awry, it is the outsourcing company 's name that will take a beating.
In the past few years, although outsourcing has been seen as a common method used to achieve a successful business, many literatures on Information System still believe that most of the software could be better off build in-house and this can also be supported with the fact that there are evidences of organisations that took a significant damage from outsourcing. Therefore, whether or not a company should outsource part of their projects, it all depends on how the organisation manages its outsourcing system. This paper is going to examine a little bit of outsourcing challenges, outsourcing management processes and as well as the better ways to obtain full benefits from outsourcing.
This paper was done to cover the DDBA-8510-1 Seminar Global Supply Chain Management final seminar research paper. Supply chain management, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible (Handfield, 2011). Global Supply Chain Management involves a business or a company’s worldwide interests and suppliers rather than simply a local or national orientation.
Outsourcing can also help companies to have access to new technologies that might not be used in their company. This is mainly because the outsourcers use the latest state-of-the art technologies to serve their private sector clients. And this might also increase the change paradigm shift and rapid migration of these companies to new technology. Outsourcing also helps multi functional areas and department of a public sector providing the benefit of 24-hour operational cycles and providing necessary services to their customer.
In 1876 Alexander Graham Bell invented the telephone which enabled people to communicate with one another in an efficient manner. Since then technology has advanced at a rapid pace allowing people to be more connected than ever before. For example, a person working for Pepsi Co in Houston can easily connect with their counterpart in London or Mumbai. The invention of the internet has allowed business to communicate across the world within seconds thus creating a global economy that depends on one another.
Outsourcing does come with its issues, it lessens the control that they have with how some of or all of their services are delivered. This could have the potential to damage the corporation’s reputation and the liability within the business. Communication is the
Other researchers have identified several outsourcing issues, trends and strategies that companies take in establishing and effectively managing their outsourcing activities (Sinderman 1995; Carney 1997). The trend is for outsourcing relationships to function more as partnerships. Outsourcing providers are taking increasing