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    Outsourcing Outsourcing Presentation Transcript

    • Outsourcing in General.
    • Contents 1 What is Outsourcing? 2 Spectrum of Outsourcing 3 Why Company Outsource? 4 Outsourcing Risks 5 Outsourcing Process 6 Drafting an outsourcing contract 7 Concerns of Outsourcing in SCM 8 Myths of Outsourcing in SCM
    • What is Outsourcing?
      • Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.
      • Outsourcing is defined as the contracting of one or more of a company’s business processes to an outside service provider to help increase shareholder value, by primarily reducing operating cost and focusing on core competencies.
    • The entire spectrum of sourcing
      • Outsourcing,
        • To obtain components for products or services from sources outside the organization.
      • In-sourcing,
        • Transfer tasks that were performed outside the organization into the organization
      • Offshoring,
        • Outsourcing overseas or in a separate country
      • Near-shoring,
        • Outsourcing to cheaper overseas, still geographically closer locations , e.g. Canada and Mexico
      • Rural-sourcing
        • Outsourcing to cheaper rural areas in the United States
      • Volunteers
        • Least expensive but sometimes most difficult to manage
    • Why do companies outsource?
      • Reduces administrative burdens
      • Focus on strategic areas
      • Reduce costs
      • Focus on core functions
      • Acquire new skills
      • Acquire better management
      • Assist a fast growth situation
      • Avoid labour problems
      • Focus on strategy
      • Avoid major investments
    • Why do company outsource?
      • Handle overflow situation
      • Improve flexibility
      • Improve ratios
      • Jump on to bandwagon
      • Enhance credibility
      • Maintain old functions
      • Improve performance
      • Begin a strategic initiative
    • Why do companies outsource? 10% 30% 60% Without Outsourcing Strategic Tactical Admin Admin Tactical Strategic With Outsourcing
    • Outsourcing Risks
      • Short term :
      • pricing issues
      • operational issues at supplier’s end
      • Long term :
      • non-performance by a supplier
      • nonalignment of company’s goals with supplier’s goals
    • Outsourcing Process
      • Understanding company goals and objectives
      • A strategic vision and plan
      • Selecting the right vendor
      • Management of the relationships
    • Outsourcing Process
      • 5. A properly structured contract
      • 6. Open communication
      • 7. Senior executive support
      • 8. Use of outside expertise
    • Drafting an Outsourcing contract
      • Why and what to be outsourced??
      • Clear business objectives
      • Internal and external benchmarking
      • Develop performance and cost targets
    • Drafting an Outsourcing contract
      • Develop initiative-based targets
      • Fulfillment of initiatives beneficiary for both parties
      • Review performance regularly
      • Expand or shrink the relationship
    • Concerns about Outsourcing in SCM
      • Fear of losing control
      • Lack of confidence
      • Lack of outsourcing education
      • Management philosophy and tradition
    • Myths of Supply Chain Outsourcing
      • My Outsourced partners are all supply chain experts
      • Partners have state-of-the-art IT infrastructure
      • By outsourcing production and fulfillment, no need to worry about execution
      • Outsourced partners will provide expert project management
    • Myths of Supply Chain Outsourcing
      • Outsourcing automatically gives a time-to-market advantage
      • Fulfillment is easier to outsource than manufacturing
    • Thank You !