Offshore supplier risk Vs onshore supplier risk

Topics: Management, Risk management, Risk Pages: 5 (1490 words) Published: October 17, 2013
Supply Chain Risk in Onshore Vs Offshore outsourcing
Appendix
1. Introduction……………………………………………………………………………………………………………………1 2. Importance of supply chain risk in project management………………………………………………..2 3. Onshore and offshore risk……………………………………………………………………………………………..3 4. Conclusion……………………………………………………………………………………………………………………..6 5. Bibliography……………………………………………………………………………………………………………………7

1. Introduction
Supply chain is one of the pivotal for any business. All successful organization whether they are profit, non -profit, government, public service rely heavily on the supply chain management. A supply chain can bring a competitive advantage and benefits to any company however there are many risk associated with supply chain which can disrupt entire business. Supply chain department of any company often have to decide whether go for offshore supplier or near shore supplier. The increase in global competitive market supply chain management of many companies are adopting outsourcing technique to improve their core competencies, reduce operating cost, deal with limited internal resources issue and allocated internal resources to more value added functions (Pierce, 2008). Outsourcing has become trend in business during the last 20 years. There are many functions that company can outsource such as manufacturing, design and engineering, human resource, Information technology, customer services to onshore or offshore suppliers. Outsourcing of any kind, onshore or offshore always has certain risk associated with it. However the offshore outsourcing poses more risk compared to onshore outsourcing. Offshoring which is a result of globalization has increased in recent decades due to lower labor cost, skilled employees; shorten product life and saving shipping cost (Poltenson, 2012). Nonetheless many countries are also bringing manufacturing back to homeland due to increased wages, oil prices, shipping cost, more lead times and quality issues.

2. Importance of supply chain risk in project management
Supply chain is one of the vital part of project management. Effective and reliable supply chain is essential for the success of the project. Supply chain risk can have detrimental effect on project. Project management involves initiating, planning, executing, monitoring, controlling and closing process for any project. Project management includes processes of conducting risk management planning, identifying potential risk, prioritizing risk by using qualitative and quantitative risk analysis, planning risk response and monitoring and controlling the risk on a project. The supply chain risk either due to offshore or onshore can be identified, prioritize, managed, monitor and control using project risk management methodology of project management. The project manager and project team should evaluate all the risk while selecting the supplier onshore and offshore and prepare mitigation and contingency plan to face the risk without effecting project time, scope, quality, resources and cost.

3. Onshore and Offshore supply chain risks
The Onshore and offshore supplier both has their own set of risk as mentioned below:- Technical Risk: Technical risk by supplier using different technical standard. If manufacturers key part suppliers using different technical standard may affect the quality problem and can also disrupt the entire supply chain. Loss of Knowledge: The manufactures often shares technical information, R&D information and business related information to supplier. This can lead to problem if supplier misuses this information or take other company’s innovation, analyze it, copies it, improves it and then first launch in the market which is called reverse engineering. Logistic risk: The instability in transportation can delay logistics, distribution and can lead to distraction in supply chain. The transportation delay can be caused by natural disaster, severe traffic accidents, severe weather, defected items transported and...

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Bin Liu, Y. Z. (2012). Research on the supply chain risk evaluation, Ke Ma. 2012 International conference on computer science and electronics engineering .
Hancock, S. M. (2005). March.
Michael A. Coakley. (2013, June 2013). Retrieved from http://www.kmco.com/articles/looking-forward/5-important-risks-involved-with-offshore-suppliers/
Myerson, P. (2012, December 4). the lean supply chain. Retrieved from www.industryweek.com: http://www.industryweek.com/blog/hurricane-sandy-and-its-effect-retail-supply-chain
Nair, D. (2013, July 5). industry. Retrieved from www.thehindubusinessline.com: http://www.thehindubusinessline.com/industry-and-economy/banking/uttarakhand-flood-claims-to-impact-general-insurers-profit-this-fiscal/article4885346.ece
Pierce, R. (2008, Jun 12). Retrieved from toolbox.com: http://it.toolbox.com/blogs/erp-project-tidbits/risk-versus-reward-offshore-nearshore-onshore-or-inhouse-development-25232
Poltenson, N. (2012, August 31). Retrieved from The central New York Business Journal: http://web.ebscohost.com.proxy.lib.wayne.edu/ehost/detail?vid=8&sid=d9c32df8-cf9f-4542-b45c-279356895661%40sessionmgr115&hid=119&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#db=bwh&AN=79389898

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