• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Operations Management - Outsourcing

Extracts from this document...


Operations Management OUTSOURCING INTRODUCTION Production and Operations Management is concerned with the problems of developing, producing, and delivering goods and services. Researchers focus on how to combine concepts, models, and data to help managers develop better systems and make better decisions concerning operations. Recent research in the area has focused on inventory, international operations, forecasting, information systems, logistics, purchasing contracts, outsourcing, and more. Today's highly competitive world business environment is forcing management to aggressively pursue ways to achieve efficiencies, improve customer service and save money. In their frantic search for new ways to streamline company operations, the concept of outsourcing "non-core" business processes and activities is a tempting new way to improve operations and costs. Management has become intrigued with the idea that they should be focusing on managing and controlling those key "core" business processes and activities that their organizations are best at doing and that represent the mainstay of the business instead of trying to dilute precious efforts in some of the business activities that do not represent the essence of the activities of the company. WHAT IS OUTSOURCING? Outsourcing is hiring someone whose expertise can perform a business function or activity better, more cost effectively and in a more timely manner than can be achieved in-house. ...read more.


SIGNIFICANCE OF OUTSOURCING In today's competitive business environment, most of the companies are indulging in outsourcing. Firstly, Outsourcing helps in transformation process in an organisation by subcontracting, total outsourcing etc. For example, Nike utilizes an outsourcing strategy, using only subcontractors throughout the globe. Majority of their output today is produced in factories in China, Indonesia, and Vietnam, but they also have factories in Italy, the Philippines, Taiwan, and South Korea. Reebok, another leading footwear manufacture also utilize a 100% outsourcing strategy and manufacture their products throughout Asia. Secondly, by outsourcing companies can concentrate on their corporate strategy and operations priorities. IBM entered into a $5 billion manufacturing outsourcing arrangement with Sanmina-SCI, an electronics contract manufacturer. The agreement supports overall business strategy and operations priorities in both companies. Thirdly, outsourcing helps in product and process improvement activities by gaining advantage to latest technologies available through the vendor. For example, an outsourcing contract signed between Toyota Australia and Fujitsu helped Toyota gain access to the latest hardware and software, which improved product development. Further more, outsourcing helps managers to concentrate on core competencies. For example, Coca-Cola Amatil believes that outsourcing e-commerce allows us to focus on our core competencies rather than new technology. ...read more.


* Verify credibility: before choosing the vendor, to whom the activities would be outsourced, company should ensure that the vendor has a good reputation in terms of stability, history, financial background etc. * Maintain control: Even though the company's activities are outsourced, the company must make sure that it retains enough control over the outsourced activities. CONCLUSION Today's volatile economy has forced most manufacturers to explore outsourcing. Many companies see it as an opportunity to reduce costs, improve flexibility and streamline production processes. As the face of business changes, more and more businesses are looking to reduce costs and share services. Not only are more and more companies looking to outsourcing as a management solution, but the range of services to be outsourced is also expanding and adapting. Hence, in a nutshell, if the right kinds of jobs or activities are outsourced to the appropriate sources, it would be very beneficial for the organization. Thus, many organizations are outsourcing various activities as it not only helps in lowering costs, but also provides better outputs that in turn increase the profitability and credibility of various organizations in their respective industries. REFERENCE LIST http://www.e-isn.com/manage_outsourcing.htm http://www.gxs.com/downloads/cs_coke2.pdf http://www.eedesign.com/pressreleases/bizwire/111519 ?? ?? ?? ?? MGMT316 Khalid Rashid 2548446 Page 1 of 10 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level ICT in Business section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level ICT in Business essays

  1. 3. Consider the management of resources

    A disciplinary would be taken out by the manager towards an employee if they don't comply to business rules and conditions or are not working to the best of the ability. However a grievance procedure is the other way around and is the employee taking it out on the manager.

  2. Business Aims and Objectives.

    An external influence which may affect Tesco will be the local community. A large Tesco store needs to think how it is going tot keep its pollution to a minimum. Also protecting the environment is said to be a law put in by the government to keep the environment at its best.

  1. The Purpose and Scope of MIS - Management information systems.

    Barclays Bank sets its objectives and reviews them regularly. They strongly believe that the key to achieveing their objectives is ensuring that all employees are fully aware of the objectives and how they plan to reach them. The employees are also all briefed on the information that is used to plan and control objectives.

  2. Customer Service Assingnment

    Sainsbury satisfies loyal customers every time, then hopeful many will become customers for life. ''80% of sainsbury business comes from 20% of their customers'' Sainsbury tend to find that 80% of their business comes from only 20% of their customers.

  1. Supply chain management

    The true cost savings or costs incurred can then be identified, and will vary between products and markets. 4. ASSESSMENTS AND ACCREDITATION An increasing number of companies are adopting methods of assessing their existing and potential suppliers (and customers) to establish that they can meet the objectives of the supply chain (for example, low prices, fast response, environment friendly, etc.).

  2. BUSSINESS AT WORK - Coca Cola

    This becomes a main objective over profit. The company can now look past making money because they will always have income, so they aim mainly on just making their customers happy. By making their main mission statement to please people, then this will help make customers feel secure.

  1. Manzana Insurance - Operations Management

    Hence they give priority to RUNs, which happen to have higher premiums than RERUNs. 2. Incorrect prioritising of requests: RERUNs are being given last priority in the order of requests taken-up based on a false assumption that RUNs and RAPs are more important and generate more revenue than RERUNs.

  2. Investigate Coca Cola Company.

    It is mainly larger companies such as Coca Cola that are public limited companies. The advantages of a public limited company are: * Shareholders have limited liability * The sale of shares enables larger sums of money to be raised * While the company has this money permanently, the individual

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work