Outsourcing- ↑flexibility, focus on core competencies, deve comp advantage.
Can enable: leveraging of supplier’s expertise, ↑in innovation.
Results in: lower staffing levels, ↓costs, ↑flexibility.
Strategic- Not outsourced: an item that is critical to success of product. Item requiring specizd design, mfging skills or equip. item that fits well w/in firm’s core comp.
Make or Buy Tactical- poor supplier perf, changing sales demand, restricted mfging capability, mod of product, ↑mfging capability, imp. supplier capability.
Favor Making: cost considerations, desire to integrate plant ops, use of excess plant capacity, control over prod and/or qlty, design secrecy reqrd, unreliable suppliers, desire to keep stable work force.
Elements in Make Cost Analysis: delivered purchased material costs, direct labor costs, +costs from qlty & related probs, +inv carrying costs, +factory OH costs, +managerial costs, +costs of capital.
Favor Buying: limited prod facilities, cost consids (less expensive), small-vol reqrmnts, suppliers specialized know-how, stable work force, multiple-source policy, indirect mngrial control consids, procurement & inv. consids.
Elements in Buy Costs Analysis: purch price of part, transport costs, rec’ing & inspection costs, +purch costs, added costs related to qlty or service.
Cost Consids: Time (short-term- focus on direct measurable costs. Long- measures hidden costs like storage, inspect, tooling, qlty, etc) Capacity (fixed costs issue if need to ↑ capacity).
Other factors influencing: prod requirements, quality require, business process outsourcing issues (can speed up innovative change, orgs can outsource entire functions, secrecy issues), Tech Risk & Maturity, unreliable suppliers, supplier’s speclzd knowhow, small vol’s, limited facilities, workforce stability, multiple-source policy, mangrial control consids, procurement inv consds (paperwork).
Dangers of outsourcing: loss of; control,... [continues]
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(2011, 11). Supply Chain Management Exam #2 Cheat Sheet. StudyMode.com. Retrieved 11, 2011, from http://www.studymode.com/course-notes/Supply-Chain-Management-Exam-2-Cheat-842410.html
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"Supply Chain Management Exam #2 Cheat Sheet." StudyMode.com. 11, 2011. Accessed 11, 2011. http://www.studymode.com/course-notes/Supply-Chain-Management-Exam-2-Cheat-842410.html.