Outsourceing

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Outsourceing

  1. 1. 379th PROJECT MANAGEMENT COMMITTEE MEETINGHeld on: May 14, 2005At: 1100 hrsVenue: Conference RoomAttendance: Except GM Spinning, all members present, MD in chair.
  2. 2. AGENDA POINTS
  3. 3. KTML SPINNINGSpinning Performance ReportMonth : May 2005 Period ----> Unit of May 06 to May 12 May 01 to May 12 Remarks Measurm ent Desired Actual Particulars Desired Actual % Qty %UtilizationInstalled Capacity - Spindle No 79,520 79,520 Shifts worked No 21 21 36 36 Utilization % 99.00 98.72 99.00 97.90Working Efficiency Average Count No 52.55 51.67 Average OPS 2.82 2.78 2.86 2.78 Working Efficiency % 94.09 92.59 94.07 91.63Raw Material Issue Pak Ctn Kgs / % 59,231 38.30 106,484 38.38 Impt Ctn Kgs / % 69,656 45.04 126,379 45.55 PSF Kgs / % 25,763 16.66 44,584 16.07 Kgs / % 154,650 100.00 277,447 100.00Yarn Production Kgs / % 130,946 84.67 224,520 80.92 Hard Waste Kgs / % 906 0.69 1,501 0.66 Yarn - B. Grade Kgs / % 634 0.48 1,089 0.48
  4. 4. Period: 06.05.2005 to 12.05.2005Maintenance Spinning: Following intimated: Except one Orion – M all Auto Winder spindles are serviceable. M/s ACMA TEX dispatched Switcher Box which would be received by Monday. Motor Tripping in Section IV; discussed. 30 KW Motor to replace 22 KW motor being used for 18000 RPM on 22 Count frames.
  5. 5. IT-OUTSOURCINGHow to reduce searching cost Select a trust worthy vendor. Vendor should be very cooperative. Interviewing the vendor’s previous & current clients.
  6. 6. IT-OUTSOURCINGHow to reduce contracting cost Vague ideas from the contract should be eliminated. Contract should be flexible.
  7. 7. IT-OUTSOURCINGNecessary clauses in IT outsourcing contract Evolution clauses apply both to the price and the technological flexibility as bench mark clauses. Reversibility clauses are about either material reversibility or human reversibility.One gives the company the options to buy premises from the vendor and the other allows the company to hire employees from the vendors.
  8. 8. IT-OUTSOURCINGHidden Cost #2Transitioning to the Vendor Elusive cost Transition time is(1 year) 70% was no longer than 10 months
  9. 9. IT-OUTSOURCINGDetermining Transition CostTransition cost are elusive A company incurs as long as the vendor has not completely taken over the internal IT department. The time that internal employee spent helping the vendor transition cost.
  10. 10. IT-OUTSOURCINGCost that stem from disruption and from vendors inability to react as quickly and appropriately as the internal department the beginning of the contract are transition costs. Reducing transition Cost The first step in decreasing transition costs to be aware of it. Companies would be well advised to avoid outsourcing activities that a idiosyncratic an to keep IT employees in house the company should know what it wants from the out source activity.Having experience with IT outsourcing
  11. 11. IT-OUTSOURCING Cost#3 Managing the effortThis the largest category of the hidden costIt covers three areas: Monitoring that IT vendors con fulfill there contractual obligations
  12. 12. IT-OUTSOURCING Bargaining with IT vendors. Negotiating any needed contract changes.Determining the cost of managing Vendor Unlike out sourcing fees vendor management costs for IT outsourcing are not readily apparent.
  13. 13. IT-OUTSOURCINGManagement costs purelyinternal companies don’t takemanagement cost into accountuntil they become visible so itcreate problem.
  14. 14. IT-OUTSOURCING0.160.140.12 0.10.080.060.040.02 0 Less than $10 million Greater $10 million to 100 than $100 million million
  15. 15. IT-OUTSOURCINGReducing the cost of managing vendor IT outsourcing experiences reduce the cost of managing the relationship the more the company the more a company deals with the IT vendor the faster it can judge the vendors performance. Trust should be cultivated in the vendor relationship this will narrow the gaps between the both parties.
  16. 16. IT-OUTSOURCINGThe fourth hidden cost comes from switching vendors or reintegrating IT activities internally: Determine the cost of transition after outsourcing. This involves finding the vendor, drafting a new contract and transitioning resources.
  17. 17. IT-OUTSOURCING Reintegrated cost involves building a new internal activity from scratch.Reducing the cost of transitioning after outsourcing Awareness of outsourcing transition cost.
  18. 18. IT-OUTSOURCINGPresence of reversibilityclauses in the contract.Sufficient level of ITexpertise inside thecompany.
  19. 19. Vendor search and contracting Initial cost transition cost Post IT out sourcing Cost of managing the IT- transition cost outsourcing effort TimeOriginal idea toOutsource Beginning of the IT Change of IT vendor or outsourcing relationship reintegration of IT
  20. 20. IT-OUTSOURCINGSteps to reduce the hidden costsThe activities should not be critical or surrounded by uncertainty.Companies should spend time in researching vendors.The contracts should have clauses that specify technology evolution and reversibilityThe relationship with the vendors should be the best in order to get desired performance.

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