The controlling aspects of outsourcing and the creative aspects of entrepreneurship, when effectively controlled, can lead to the efficient and effective implementation of the policies and tasks necessary to satisfy a firm’s customers, employees, and management. They both tend to focus on the careful management of the processes involved in the production and distribution of products and services (Hormozi et al. 2003).
More often than not, small companies don’t really have the capabilities to implement enable the peaceful co-existence of the two. Instead, these companies engage in activities that various schools of management typically associate with operations management. These activities include the management of tasks, human resource development and training.
However, in order for the peaceful coexistence of the controlling aspects of outsourcing and the creative aspects of entrepreneurship to happen, both must be able to deal with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often affected by the coexistence of the two. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, the coexistence must include the analysis and management of internal processes.
Outsourcing: Issues in Purchasing and Buying
The main issue in the purchasing and buying process of outsourcing is whether the buyers and purchasing agents in the outsourcing process will be able to evaluate the suppliers on the basis of price, quality and service support. They must also be able to review catalogs as well as industry and company publications in order to help them in their search for the right suppliers. Fortunately for them, a majority of this information can be easily accessed in the Internet. They have to also do some researching about the reputation and background of the suppliers and may also do some advertisements regarding the foreseen purchase actions in the hope of soliciting bids. At meetings and conferences, they perform the examination of products and services, the evaluation of the productive and distributive capabilities of suppliers, and the discussion of business considerations that have the possibility of influencing the purchasing decision. As soon as all valuable information about the suppliers is gathered, the placement of orders and contracts are started to be awarded to those suppliers who are able to meet the needs of the purchasers. The typical contracts range for several years and may even have the stipulations of the range of prices, which would allow the purchasers to reorder whenever necessary (Jones, 2000).
In some companies, however, there is a clear distinction between the work of a buyer and that of a purchasing manager. Purchasing agents and buyers focus mainly on the daily purchasing tasks. They specialize in wines. Purchasing agents perform the tracking of the conditions of the markets, trends in prices, as well as the future of the wine markets. Purchasing managers, on the other hand, are in charge of the more complex and critical wine purchases and handles a team of purchasing agents.
Outsourcing: Issues in Production Planning
Production planning is a necessary function within the outsourcing process. In manufacturing companies this process is often very difficult because of the fast rate of change and the occurrences of unplanned events. Most outsourcing companies use several methodologies depending on the rate of demand of the customer and the price of the product / service. Nevertheless, the objectives of outsourcing companies for every transaction do not change: efficiency and effectiveness.
Production planning is being implemented by most outsourcing companies in order for their activities and resources to be coordinated over time. These enable the outsourcing companies to achieve their goals with minimal resource utilization. Production planning also enables outsourcing companies to monitor the progress of their plans at regular intervals and maintain their control over operations. Production planning within outsourcing companies involves four elements: scheduling, labor planning, equipment planning, and cost planning.
- Scheduling involves the specification of the beginning, the length or the duration, and end of the planned activities.
- Labor planning involves allocating the necessary personnel and delegation of responsibilities and resources
- Equipment planning involves identifying the types and needs in terms of equipments.
- Cost planning involves determining the costs and the possibility of their occurrence.
Outsourcing: Issues in Supply Chain Management
Supply Chain Management in most outsourcing companies involves working across multiple enterprises in an effort to limit the supply chain time of delivering products and services to the consumers.
The uncertainty of demands in supply chains within outsourcing companies is easily solved through the implementation of faster response times. The product supply chain of most outsourcing companies has the luxury of longer lead times in terms of batch production of products in order to meet the demands. Most supply chains of outsourcing companies are moving in a position to support faster changes of demand by the consumers (Peled, 2000).
Because of the agile supply chain of most outsourcing companies, they are able to enjoy so many advantages. As mentioned above, the supply chain analysis tends to shorten the supply chain itself. Also, this will significantly reduce company inventories. Forecasting, scheduling and planning, on the other hand, will significantly improve.
For outsourcing companies to become a viable player in the industry, the following Supply Chain Management issues are critical:
· Financial Stability
Financial stability is crucial especially in the pursuit of Supply Chain Management and development activities. In any industry, it is important to remain updated with the latest Supply Chain management developments to be able to stay competitive in the market.
· Product Performance and Price
The outsourcing of the best products comes as a result of well-funded Supply Chain management and development activities. The strong performance of outsourced products in the market could also be linked to their cost-effectiveness. However, outsourcing companies have to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the market.
· Marketing Strategy and Distribution
High brand awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new models.
b) Discuss the outsourcing decision and its impact on a business strategy.
Nowadays businesses are cutting back on operations to focus on the core business, reorganizing their business norms through downsizing, restructuring or reengineering, as well as contracting out various functions and tasks. Commonly known as outsourcing, this particular business trend had started in the manufacturing business in the early 1980s, mainly as a means of cutting back staff and savings on wages. Krajewski and Ritzman (2002) define outsourcing as the allotment of work to suppliers and distributors to provide needed services and materials to perform those processes that the organizations do not perform themselves. To put it simply, outsourcing means going outside your organization to get a job done. While such a definition is easy to comprehend, knowing when and how to outsource is much more complex. Modern businesses must consider several factors when thinking about outsourcing. Not only do they have to consider functions that are traditionally outsourced but also the rapid evolution of information technology (IT) requirements.
Often a task is considered for outsourcing if the work performed by a consultant would require hiring additional staff if it were done in-house (Ryans, 1996). Moreover, work-handled by a former employee who may perform a specific service is also considered as outsourcing. The term outsourcing may be new to the business; however, the practice of it is not (Hormozi et al. 2003). Historically, numerous businesses have enlisted the help of outside experts to assist with tasks too cumbersome to complete in-house. Legal and financial experts, along with countless other specialists, have long been called on to assist businesses in areas outside their core competencies. Outsourcing (Jones, 2000) has been a common term for approximately 20 years.
There are many reasons for outsourcing in a company or an organization. The decision of businesses to outsource is mainly based on cost, set-up time and the availability of the expertise. The most common reasons for outsourcing are the needs for expertise, that is due to lack of learning curve and re-creating; manpower, for having not enough staff; time requirements, because of the limited time available to accomplish the job; needed for economics, owing an overall cost savings; shifting of responsibility as for deniability; and removing of stumbling blocks in keeping the work for flowing.
Outsourcing, according to current literature, is a business trend that will most likely continue in the coming years (Ryans, 1996). At present, there are two types of outsourced services of which include technology and business processes. Each can be inert partial to the subsequent areas. The first type of outsourcing is the technology services. This type covers the electronic commerce, infrastructure networks, software applications, telecommunications and website development and hosting. The second type of outsourcing is the business process outsourcing. Under this type of outsourcing are customer contacts (customer relations management), equipment, finance/accounting, human resources, logistics, procurement/supply chain management and security.
Some notable companies and businesses have been able to maintain their reputation as the world’s best. They are able to face the challenges in many of their markets directly. This is made possible by the effective outsourcing strategies and decisions aimed to deliver not only profit growth, but also on building down the foundation of their company’s brands and businesses.
The outsourcing strategies and decisions of most companies and businesses are focused mainly on driving the growth of their brands and improving their financial performance (Doz et al. 2001). These outsourcing strategies and decisions have also helped secure significant acquisitions and partnerships. And more importantly, these campaigns have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture.
The outsourcing strategies and decisions of most companies and businesses are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks for both the local and international brands.
c) Discuss the benefits and risks of adopting either of these strategies. Give examples to support your answer.
Outsourcing has many benefits (Ryans, 1996). These includes freeing up management resources, sharing costs, creating integrated networks, building new organization structures, training staff, and interfacing with other information systems. It offers a company functional specialization and flexibility. For years, companies have been outsourcing payroll and accounting functions but only recently have they discovered the benefits of relinquishing control over their IT departments.
To keep pace with the information technology advances of the last decade, many large organizations have chosen to outsource the departments that handle their information systems and network services. Companies embracing IT outsourcing have benefited from the expertise and technological capabilities of their vendors, but they have had to deal with decreased control as well. For example, four case studies presented by Peled (2000) demonstrate the highly influential role IT vendors can play in the development of public projects. Rather than merely working to meet the needs of the bureaucrats employing them, these vendors incorporated elements of their own political agendas into their work.
Still, some of the drawbacks of outsourcing include difficulties in maintaining confidentiality, retaining control and confronting transition problems. At present, issues on the outsourcing of IT professionals have been raised. Disadvantages identified in outsourcing have significantly affected other nations, that effort and ideas are being integrated together so as to prevent outsourcing. In this paper, emphasis on the significance of self-leadership in the prevention of outsourcing is highlighted. The discussion evolves mainly on the assessment of collaboration and leadership in increasing productivity among individuals, their efficacy and various requirements.
Benefits of Efficient Outsourcing of Jobs Overseas
· Economies of Scale and Scope in quality and able human resources.
· Unique Quality Human Resources owing to heavy emphasis on Effective Outsourcing Strategies
An outsourcing company’s commitment to outsourcing & development activities has always been one of the top strategies to remain competitive in the market.
· Differentiated Personnel / Human Resources
Through the outsourcing of differentiated personnel originating from the outsourcing and development activities, the outsourcing company is able to create its own firm-specific advantages. The continuous pursuit of outsourcing and development processes enables the outsourcing company to produce a steady stream of originally differentiated personnel / human resources which makes it difficult for competitors to find substitutes. Because of this differentiated approach, the outsourcing company is able to outsource their human resources worldwide, which enables them in turn to maximize the returns on outsourcing and development expenditures.
Outsourcing of Overseas Jobs in the United States
In lieu of the present developments in the US society, there have been significant visions of outsourcing that evolved. A majority of these learning visions are based on the idea that outsourcing of jobs overseas is a social process where knowledge is denied instead of being acquired passively. Outsourcing, then, transforms into an interactive process. The interaction is being verified through the help of the participants in the outsourcing process such as the US workers and the US government. In this framework, high quality of outsourcing of jobs overseas would mean the continued guidance and support of the active learning process of the public. Obviously, this would call for an intensive and phased guiding strategy.
When in the active pursuit of outsourcing of jobs overseas, the interaction of the US government with the US job market forms an integral part towards its success. Collaboration as a method is gradually being used by the US government nowadays. Through this approach, the US workforce can learn from the outsourced personnel through the imitation of their techniques in the socialization processes. In the process, the US workforce is able to obtain the chance to see their own ideas in a different aspect and therefore be able to take alternatives into consideration. The relative effectiveness of this approach is determined with the capability of the US workforce to continuously challenge their pre-acquired knowledge by trying to adapt to the interpretations of outsourcing.
Aside from the US workforce and the US government, the different resources of outsourcing belong to a third category of factors of a learning environment. Moreover, outsourcing methods have shown signs of significant growth over the past years. Consequently, obtaining knowledge becomes more complicated. This is because the transformation of all this information into knowledge requires the US job market to possess the appropriate reference frameworks. But the US government can certainly help the public transform
ASSIGNMENT 2
4. In order to survive, many businesses are adopting a global supply chain strategy.
a) Show how globalization impacts, or could impact, on your business.
Important changes in the understanding and management of globalization and its impacts on businesses have been developed in the past 10 to 15 years. Various researchers, practitioners and policymakers now acknowledge that globalization and its impacts on businesses can be conceptualized from a functional perspective and that appropriate interventions involve the development of alternative measures to cope up. It was also noted that the establishment of a conducive business strategy for learning and training amidst globalization have served effectively in implementing organizational change strategies for transformation. At present, this philosophical shift has extended to various settings, including multinational companies and organizations. Managers here have recognized that some employees do not have the skills and behavioral repertoires necessary to cope with the many expectations and challenges of globalization. Hence, these employees may have the tendency to remain contented with their mediocre performances as their alternative way of mitigating these expectations.
Globalization and its impacts on businesses often lead to the efficient and effective implementation of the policies and tasks necessary to cope up with upcoming challenges or endeavours it brings along. Organizational change strategies focus on the careful management of the processes involved in the gradual adjustment of the management and its workforce towards the new company goals caused by globalization.
More often than not, the management and its workforce don’t really have an easy time adjusting to the changes brought about by globalization. As a result, the management and its workforce engage in activities that are somehow resisting to changes. Therefore, the major activities of the company such as the manufacturing of products, product development, production and distribution become severely hampered.
However, globalization deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of human resources, logistics and evaluations are often the focus of globalization. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, globalization and its impacts on businesses include the analysis and management of internal processes.
Because of globalization, companies today have to be efficient, flexible and profitable. Without these factors, it would be very difficult to compete in the global economy. Aside from participating in strategic alliances to fully enhance the resources they need to become competitive, many companies now evolve and expand through mergers or acquisitions This is another impact of globalization among businesses. Among the most important merger and acquisition deals in recent years are Daimler-Chrysler, Chase-J.P. Morgan, SKB-Glaxo, NationsBank-Bank of America, and Deutsche Telekom-Voice Stream. Although global economic and market conditions are unpredictable, the future provides the best conditions for the continuation of merger and acquisition processes.
Some businessmen argue that the fast pace of globalization ultimately becomes the driving force behind the formulation of agreements and rules for business conduct. Merging and acquisition deals may have the potential to create enormous economic and social consequences. They can easily drive away the major competitors within a country. They can also determine how and where people should work. However, earning the approval of the government for merging and acquisition deals would never be easy.
Organizational change amidst globalization undergoes through a series of stages. At every stage, the effective management of human resource (HR) and cultural issues is critical. This is initiated by the identification of the HR issues and their significance for the company’s activities. If not handled properly, this could lead to the further downfall of the organization instead of going upward towards the ladder of success.
It is a common knowledge that globalization benefits industries especially those which are relatively new and is still in their early stages of development. Through globalization, businesses will show signs of rapid growth and it can be estimated that there will be more than a million businesses that will prosper within the year. And it is further being expected that within the next years the tremendous growth and technological advancements will continue in industries because of globalization. Mobile commerce and multimedia terminals are just some of the technological advancements already being expected to be brought about by globalization. Therefore, the continued growth and development will also make it imperative for localization to occur in industries in the years to come as the impacts of globalization make their way (Dunning, 1993).
Globalization offers companies and businesses tremendous benefits in terms of improvement to their policies in terms of the control of the business and the creative aspects of entrepreneurship to co-exist peacefully, However, companies and businesses must not lose sight of its core competencies while introducing the impacts of globalization. Otherwise, the image of these companies and businesses might be put in jeopardy.
Meanwhile, some see globalization only as something that hinders the productivity of businesses. However, upon close examination, globalization could actually pave the way for companies and businesses to improve even more their capabilities in enabling the peaceful coexistence of controlling their business and the creative aspects of entrepreneurship. The bottom line is they would be able significantly gain in accepting globalization. For example, a company’s strengths in product development combined with the capabilities and impacts of globalization can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the companies and businesses involved.
However, the question remains whether companies and businesses could be able to implement and accept the impacts of globalization, and whether these options can be acceptable to the key stakeholders. Any business transformation brought about by globalization may also involve the sharing of expertise. Nowadays, most companies and businesses have traditionally relied on the inside-out approach. It is important to note that globalization would have many implications on a business’ values and culture as well as its resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects (Gertler et al. 2004). Somehow, companies and businesses will be able to overcome this barrier in managing strategic changes brought about by globalization in the process of implementing any of the above mentioned strategic options.
b) Outline supply chain issues which would need to be consider when sourcing globally, giving examples.
The possibility of the occurrence of political and electoral crises within the regions where the business has outsourcing operations will not be helpful at all to its strategy to solidify its position in the industry. While the implementation of some free trade policies promotes common tariffs among countries, other countries will have no choice but to follow the individual national tariffs imposed on their products. Nevertheless, companies view the liberalization of the industry as an opportunity rather than threat as the earlier issues have identified.
The possibility of the occurrence global recessions brought about by companies closing down and the loss of jobs may have a direct impact on strategy of companies and organizations dominating the world market. Also, there are huge differences in terms of the GDP per capita earnings among countries. This situation should make companies and organizations ponder about its positioning strategies in certain countries (Hancock et al. 2002).
With the rise in the middle to upper-middle class households in certain countries, there also exists a strategy mismatch for not considering the potential for consumer market. There is a need for business strategies to be aligned to any revolutionary technological changes impacting industries.
In order to remedy these issues, a tie-up or merger with various local outsourcing companies offers tremendous benefits in terms of access to their Supply Chain management policies, infrastructure and even its resources. However, our organization must not lose sight of its core competencies while pursuing these tie-ups. Otherwise, the image of the organization might be put in jeopardy.
Meanwhile, the collaboration of an organization with its major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for our organization to improve even more its Supply Chain management. The bottom line is both sides would be able significantly gain in such an alliance. An organization’s strengths in product development combined with the Supply Chain management capabilities of its competitors can transform us suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the outsourcing companies involved. Another possible setback could be whether any of the organization’s competitors has the need to form alliances. The third option also focuses on alliances, but this time with one of the leading suppliers. The benefits of these alliances should outweigh the costs in the long run.
In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether the organization could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. The organization has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on our organization’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects.
c) Outline the challenges that your business faces, or could face, due to global logistics, brought about by the globalization of supply chains.
There is definitely a need to reconcile both the impacts of globalization on businesses and the creative aspects of entrepreneurship. While most businesses focus on their core competencies with market position following their resource base, they will be put into a disadvantageous position should they choose to neglect both the macro as well as the industry environment. Therefore, businesses have to be aware of the latest changes brought about by globalization, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as market sensing, customer linking, channel bonding and technology monitoring.
The advantages enjoyed by most businesses may come in the form of increased revenues. Knowing what the market demands and the latest trends could help businesses fully exploit their research and development capabilities to come out with products which are not only cost-effective but also high in quality. The strategic option is actually a creative aspect of entrepreneurship, and can even be used as marketing tool where the focus is on staying close to the company’s customers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the businesses (Peek et al. 2003).
Nevertheless, the mentioned strategic option seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world economy. The key stakeholders too should not have any objections so long as the company’s core business is not threatened. By virtue of a centralized control of its business, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of operations.
In order to sustain the growth of businesses, companies must also face four (4) main challenges brought about by globalization of logistics.
- The first is building a strong local operating platform, and then testing it over time to determine if profitable growth would be possible through the selection of the right brands and creation of the structures for distribution to supply a local national market.
- The second is broadening the portfolio in order to make way for international brands to give access to those not supported by the local brands (Jayaratne et al. 2001). Global perspectives are also gathered to help optimize both the local and global brands. By broadening the portfolio, Dustin would be able to meet the consumer’s needs and minimize the costs of local infrastructures.
- The third involves a balanced portfolio among established and developing markets. In this instance, the possible markets must be able to provide the funds to invest in developing markets that have lower GDPs but possess a tremendous potential for growth and development.
- The last challenge involves market consolidation which would help in the securing of positions and the creation of shareholder values.
Global Logistics Planning
A Global Logistics Plan would serve as the link between the established standards and practices in the company as well as the challenges brought about by the globalization of supply chains. It must be able to articulate, organize, and most importantly integrate the content and processes of the company policies with integration of appropriate technologies to cope up with the challenges brought about by the globalization of supply chains. It must be able to facilitate multiple levels of company policies and decision making.
In general, the global logistics planning is an ongoing process that would translate organizational, public policy, and technology needs of a company into concrete actions. It allows the company or organization to take advantage of the latest innovations necessary to cope up with the challenges brought about by the globalization of supply chains while at the same time minimizing the negative impacts of unexpected challenges. Global logistics planning provides a clear pathway for the implementation of the above mentioned strategies which could result into a more efficient expenditure of resources and an improvement in company performance even amidst the challenges brought about by the globalization of supply chains.
The global logistics plan should reflect the policy and environment of the company. However, the global logistics plan cannot guarantee the needed changes. The global logistics plan must ensure that the processes of global logistics plan development, implementation, and evaluation are included as the integral components of the implementation of the necessary innovations to cope up with the challenges brought about by the globalization of supply chains. A well-designed global logistics plan would be a dynamic tool that will serve as a guide for the company’s innovations. This plan would also represent opportunities for dialogue and professional development that enhance company decision making.
The Global Logistics Planning for globalization of supply chains should:
- Be an organized and continuous process, utilizing a simple yet direct planning model, and resulting into a document which would improve how the various innovations are used for the company’s management, assessment, and communications.
- Take into consideration the mission and philosophy of the company, its management and employees. While outside assistance, such as those that can be provided by consultants, can inject broader perspectives to the global logistics planning process, the process requires the total commitment of the management and staff.
- Be broad but realistic enough in terms of its scope. The global logistics plan must also include economical and technically feasible solutions.
- Involve all the stakeholders—including the management, employees, staff members, clients, and global logistics experts.
- Identify the strengths and weaknesses of the company and how each will impact the implementation of certain innovations.
- Make a formalization of the company procedures and methods for making global logistics decisions, which should include also the setting of priorities and the evaluation, upgrading, and uses of technologies.
- Be driven by the goals and objectives of the company rather than by global logistics developments.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment