Creating close relationships are vital to any company whether it is big or small. The article “5 Ways to Build Better IT Outsourcing Relationships” explain to us the importance creating a bond with whomever we decide to choose as a business partner. The 5 ways that create value are to scope and scale, service levels, the value of a healthy relationship, global delivery models, and process improvement. It is important to know before hand what the company is going to need IT service providers to do for their company because it will make it easier for both sides to figure out costs, amount of work that will be put into the services, time, and labor. If the company is able to create a healthy and balanced outsourcing relationship then the company and the IT service provider will be able to communicate and to be on the same page.
I believe that the third way is the most important, the value of a healthy relationship, because not only in business you must have a healthy relationship with those who you work with, but in everyday situations. By creating healthy relationships, one opens an endless amount of doors with who ever you meet. People will be more understanding of what one has to offer and will go out of their way to help with any issue or problem that may arise. In the business aspect, “historically, clients have had a myopic focus on cost reductions and securing the ‘best deal’ without fully appreciating the consequences on service delivery and business user satisfaction,” says Daly. In this sense it makes creating a relationship with the IT more valuable since the company will be saving money and working with someone that already knows the company’s identity very well.
Nowadays it is very crucial for companies to create a partnership with an IT company or to hire a person for your company that specializes in IT. Businesses have to use technology to survive in today’s economy. The majority of people now own smartphones that can access the internet at any time and place. It would work against the company if they did not use take the time market themselves to their customers on the internet or through apps. I personally use my phone everyday to make decisions on where to eat, how to get from one location to another, and whether to purchase an item in the store or through Amazon. We all use our phone to help us make these little decisions.
There are endless opportunities for a company to outsource for an IT specialist. The company just has to make the right decision on whom to hire, they need to find the perfect match that will fit in their current and future plans. What are other benefits and reasons to outsource for an IT specialist and why might this help your current job or for the plans in your future?
As I was growing up, as a kid in the early 90’s, I quickly learned that anything that said it was made in China was an inferior product to those that were made here in the USA. However, even with this connotation of poor quality it seemed that every product that I came into contact with was made somewhere outside of the country. Over these years, leading to this very day, the vision of these products has moved away from the poor quality of old. Now it seems that what truly upsets us about products not made in with the USA is the fact that we have many of our own looking high and low for a job in the manufacturing industry.
In recent years it has seemed to have come nearly impossible to compete with markets like China, where it comes to manufacturing, with considerably low wages being received by their workers. While wages in China are coming up, from an average of 58 cents per hour in 2001 and an estimated $6 per hour in 2015 http://www.csmonitor.com/Business/new-economy/2012/0510/As-Chinese-wages-rise-US-manufacturers-head-back-home, there is still a large gap compared to their American counterpart, at about $19 per hour http://www.trade.gov/mas/ian/MBU/index.html. Even so, as stated in the Wall Street Journal article “Once Made in China: Jobs Trickle Back to U.S. Plants” manufacturing jobs are starting to make their way back to the good old USA. The progress has been slow in the American manufacturing market after a 35% decline in jobs between 1998 and 2010 we have seen just a 4.3% increase since. But, this increase that is expected to be about 3.2% this year compares to that of just 1.6% in all other fields.
According to Boeing officials and reports, they have begun to take back into organization their supply chain management. Their new hook on their global supply chain will increase production of their new, “Dreamliner” jets. On there other hand, there are many people who believe that this increase in production from new supply chain management will, “expose new supply bottlenecks” (Kelly, 1). Boeing has had past trouble with their deadlines on production. They have numerously delayed their scheduling because of management issues. Boeing has had, “difficulties managing 325 suppliers building parts for the 787 at 5000 factories worldwide” (Kelly, 3). Boeing plans to raise their carbon-composite jets per month by one and a half. This target increase in production is expected to be very difficult to achieve, but they believe it is possible. Jeffery Luckey, a supply chain management executive at Boeing, said, “We are currently on a path to achieve ten [per] month” (Kelly, 7). This jet’s production is the most outsourced in Boeing history. One company outside the US working on the jet is the Fuji Heavy Plant in Nagoyia. This plant is the sole supplier of a one-of-a-kind fuselage needed for the Boeing jet. Boeing’s planned production increases will increase strains on suppliers such as these creating new bottlenecks in the supply chain (Kelly, 8-9).
As we have learned from chapter 11, bottlenecks can be created when there is one process in the production that is essential to the product and can take a long period of time. Boeing is seeing new bottlenecks appear because of their increases in production scheduling. It is interesting to see how new supply chain management problems occur and what implications they can have on outsourcing and global supply. Boeing, if their production process is going to fit their production schedule, needs to manage the new bottlenecks that are going to occur because of their increased demand. They will have to take into account the abilities and capacities of their suppliers when making there forecasts, and release work orders at the adjusted rate from the bottleneck. One idea Boeing could look into would possibly be searching for methods to increase the capacity of their bottlenecks so that overall system capacity can increase. Moreover, changing production forecasts and changing supply chain management strategies will always require adaptations to resulting problems such as new bottlenecks, starving, or blockings.
Boeing has been increasing their production schedules because of increased demand for their 787 Dreamliner Jets. They are forecasting higher production rates despite possible bottleneck problems and other supply chain management issues. Do you believe that Boeing should take outsourcing needed for these increases in production into account? When using supply chain management to maximize shareholder value, should the ethics of outsourcing always been taken into account by managers? Do you believe Boeing will be able to effectively manage their vast supply chain in filling the 824 orders for Dreamliners and Dreamlifters?
Companies all of the world have created enormous supply chains to meet the ever increasing demand of the public. These supply chains are global and consist of manufacturers from many parts of the world. As we have learned in Chapter 2, Globalization is a big part of the operations strategy for many companies as it is a great way to increase profits and grow your whole company. Improving a supply chain is usually done by locating facilities closer to unique resources which in turn lowers the costs of production and allows for more profits. Steve Culp, the author of the article “Supply Chain Risk a Hidden Liability for Many Companies”, explains that global supply chains have a risk factor involved that companies should pay attention to. This risk factor is what creates the weak link in the chain.
The risk factor is created by the possibility of disastrous events. Whether it be an earthquake, a flood, or a tsunami, the results are devastating. As an example, the article states that the flooding in Thai created shortages in hard drives that lead to millions of dollars worth of losses for electronics manufacturers. Surely this can null any previous savings that are established by outsourcing part of the production process, but at the same time this risk needs to be looked at face value. Companies need to balance the efficiency and low cost that they desire with the risk that they are willing to take. The article gives a couple of suggestions on how to assess this supply chain risk. Out of all of the points, one stands out the most. Companies should integrate risk management into operations planning and management. This would allow risk to flow into key supply chain decisions. If supply chain risk is accounted for, companies could even set some of their profit aside as a way of dealing with the potential loss in the future.
It is all seemingly based on luck. Take two hypothetical companies, Company A and Company B. Company A only focuses on low cost and chooses suppliers based on that factor while Company B chooses suppliers based on cost and risk. If no tragic events happen, Company A will be in the better position in the marketplace and make more profit. However if tragic event halt the production of Company A’s suppliers, Company A could possibly lose millions of dollars which could result in a net loss during the current period. Because of the random factor of these events, I think that many companies will opt to just ignore the risk involved and focus on making as much profit as they can. In my opinion, ignoring this risk would be a big mistake.
What do you think, should companies incorporate supply chain risk into their key decisions on which suppliers to use?
While most manufacturing corporations are following the global trend of outsourcing elements of the production process where cost are cheaper, Harley Davidson has accomplished cost reductions, improved productivity, and ultimately fulfilling a customer need without having to outsource. The reason why a company cannot produce motorcycles abroad is based on the target market of Harley’s. Most of their customers buy these handcrafted motorcycles because they are made in America, if they were to outsource, Harley could see a potential loss in production. This creates a unique situation for Harley on how to find a way to still stay competitive.
Instead of focusing on lower product cost, a Harley plant based in Kansas City decided to focus on labor management, and its unions. In this case, some things that boosted employee morale were factory teams and worker empowerment programs. This however was not Harley’s saving grace; it would take a innovated way of thinking about the production process, one that focuses on trusting the judgment and decision-making of the union work forces instead of simply controlling them. They’re employees are expected to do more than what the job descriptions sets out. Instead of just effecting manufacturing, employees must also take on task in actually running and maintaining the plant, while making their opinions valuable. As a result the unions can effect cost reduction as well as other things that normally plant managers would consider. Employee’s are not the only one’s with extended job descriptions, plant managers split task between each other and effect all parts of the business. This teamwork, has taken this specific plant from creating only one model, to about 4 in record time. According to the article, “Team building is not a benefit in it of itself and would not create great results. Instead, the key was setting up non-negotiable processes to define the context of decision making and to provide scorecards to keep track of performance”(Michael O’Neal). This suggest that giving employee’s the ability to effect management was not enough to make the business run better, it needed intensive structure to ensure that it worked. Thus, the planted created Natural Working Groups.
This meant that employees in a team could not spend more than 2 hours on one specific task and then had to rotate. This gave employee’s flexible schedules and the ability to cover each other’s shifts if an extraneous circumstance inhibited an employee from coming into work. The work forces were also giving the jobs a salaried plant manager would have taken on creating only one level of management between the floor and upper level management. An example that shows just how much impact the unions had on the plant was when an upper level manager wanted to install and $80,000 stainless steel floor for the plant, and asked the floors opinion on if it was necessary for the plant. The unions told them that it was not going to help productivity but simply make the plant look more appealing which ultimately would not affect productivity. With their input, management decided not to buy the floor and instead put it to something else that could benefit the company. Even when the plant was not performing, instead of laying off employees the took advantage of their rotational work groups and had employees train while others worked on production and then they would switch.
These changes and management innovations are a huge part in bringing Harley Davidson from near bankruptcy in the 80’s to a strong competitive force in the motorcycle industry today, while most of its competitors have reduced cost by outsourcing. They have decided to perfect internal operations to reduce cost at home. One of the most important things to understand about Harley’s structure is that it is under constant monitoring and structure to be successful. “Partnership requires care and maintenance”(O’Neal).
Outsourcing is something that we are use in the United States because our labor is too expensive. In business, we find the most effective, efficient, and the cheapest way to go with our operating cost. Outsourcing is one way to cut labor cost in production and services and provide the same results. There are many advantages of outsourcing not just cutting cost but also maintaining a competitive advantage than competitors with the same product. A company like Nike who outsources to China, Indonesia, and Vietnam are gaining an advantage for the price but many disadvantages as well. Outsourcing is an advantage for immediate but in the long run this decreases jobs domestically and creates many risks. Ricks contain ‘inappropriate planning and analysis’ because of corrupt or local government rules, managers that might not be capable, and employees only working because that’s the only earning they will receive. Outsourcing not only impacts domestic jobs but overseas because if the company were to decide to leave that would demolish their economy in some counties.
Indiana is planning to outsource their State Lottery operations, it is currently postponed but like many other operations, they want to pass it to larger vendors. They want to determine if this will be beneficial to them to gain more money or suppress their gain. They want to use outsourcing for their advantage in improving operating and service, and for outside technology and expertise which they believe will bring more people to play the lottery and help the state. Even though many other states have outsourced their lottery services with Indiana will become 95%.
Operations has much to do with maintaining and process where for the overall product or services can provide a better, shorter, and cheaper outcome for the business to grow. Outsourcing is one big operation in which product are shipped overseas for their cheap labor or technology and brought back to be sold domestically. Strategically they have to plan if this will help with the future growth because it is a large investment or they will have to spend even more backsourcing.
I believe a lot of strategic planning that goes into deciding whether a company should outsource. Even though I believe keeping is domestic, will have the local jobs and grow our economy. Even though many companies find it as an advantage to ship the labor I think ethically, paying the workers domestically will help with the current or future recession and avoid the risks and disadvantages that goes into outsourcing. Do you think ethically outsourcing is a good plan for any product or services?
China this week has made a huge statement especially in their workforce and the growing unrest of the working conditions in many of their factories. Due to poor wages and conditions over 2000 employees at Foxxconn’s plant got into a fight last week with management, and of course this occurred right before Apple’s debut of the Iphone 5. After a decade of peaceful interactions with management the employees have appeared to have had enough.
Some of the U.S.’s largest companies, such as Apple and Caterpillar, use Foxxconn in the creation of many of their products. If the Foxxconn plant were to revolt and shut down due to the lack of workers, what would this mean for companies like Apple or Caterpillar?
Analysts are saying that the cost of production has increased 15-20% every year for the past 10 years. Even though the cost is still relatively cheap, if these suppliers fail to meet the demand for our companies, could we see production move closer to home? The statistic that was determined is that China will still be cheaper by 7% in 2015. If these employees in the factories push for better wages and conditions, the cost will obviously need to be factored into all of the orders put in by U.S. companies. If the cost gets increasingly closer to what it would cost for these manufacturers to produce these products on American soil, do you think the U.S. companies would consider it?
“If there’s going to be social unrest, either related to the conditions in factories, or if the government can’t enunciate clear policies and the domestic political uncertainty plays out in anti-Japanese unrest, businesses are going to be reluctant to make long-term commitments in China,”
We all know the IPhone 5 is the hottest item to have right now, but how has this IPhone differed from those of the past? This time around Apple decided to design the phone with a thinner, lighter touch screen. This however, lead demand to outstrip supply on the IPhone big debut weekend. This is the first time Apple is using in-cell screen technology whose components are made by LG and Japan Display Inc. This new technology change was the first time since 2010 and helped sell over 5 million new phones in just three days. The problems arose due to the fact that they needed to produce a lot of product and get it to all their distributors and this more than likely did have some impact on the quality of the phone. The IPhone accounts for 2/3 of Apples profit and a successful debut was critical this time around.
It has been a challenge for LG to keep up with the demand for parts since Japan Display has not yet started shipping out their products due to quality changes they are still working on. As one analyst put it “Apple is struggling to keep up with demand”. This is a huge problem for Apple who relies on its suppliers to be able to keep up with the demand from their customers.
Many analysts are saying these constraints will be short lived due to the fact that Apple spends so much money on these components they will be the first in line to have orders placed and shipped. Apple is these companies best customer and they will do whatever they can to make sure they keep up with Apples demand for parts. The problem now arises if Foxconn Technology Group in China will have the labor needed to be able to keep up with demand when it comes to actually assembling the phones and shipping them out to stores around the world.
Shortly after the economic downfall in 2008 began, Tom Sesti started Bandals, a new footwear company through which he introduced a line of women’s sandals with interchangeable multi-colored tops – their slogan being “Changeable by design.” The sandals were an instant classic and the five employee company was suddenly facing manufacturing and raw materials cost increases of 15-30%. Sesti knew he needed to figure out a strategy to deal with this issue – and two strategies he came up with involved moving the company overseas or introducing a new product.
Tom Seski took a look at how to improve the quality of his product and the strategy of where to locate his business. He gave a lot of thought about how to penetrate new markets. He realized if he could take something like sandals, which are sold mainly in warm months, and make them something one can wear year round, then they wont only sell for one season. Two ways he did this were by adding jewelry that could be taken off and used with other shoes such as boots in the winter, and also expanding his company to new countries where the weather was warm year round.
It took a lot of hard work and research, but Testi was able to figure out how to effectively manufacture his product as well as expand it to multiple countries. He estimated the cost of making his jewelry in China, the cost of promoting strategies, and assessed how many items he could sell and determined it was possible to break even in a year. He also estimated the costs of expanding his company to 15 countries overseas. These strategies had a high chance of being successful, so he decided to go about implementing them.
Tom Sesti’s operation strategies proved to be successful. Through the use of focus groups, multiple designs, bio-mechanicals, market research, marketing campaigns, location strategies, and design of goods and services, Bandals was able to improve revenues by 250 percent and more than triple annual profits. Sesti figured out cost effective strategies that addressed two major obstacles he saw within the seasonal footwear industry and made the right decisions on how to put his plans to action.
Modern organizations, in order to reduce operational costs and become more competitive, have designed and implemented several key strategies. One is that of outsourcing.
Through Outsourcing is contracted and delegated one or more processes, not business critical, a specialist provider, to achieve greater efficiency in carrying out the mission. Outsourcing produces multiple benefits, the most important being the following: reduced costs, reorganizing the staff structure, increase the level of working capital, improve the quality of products and services and reducing the level of business risk. It also eliminates some conflicts with the workers (with the Outsourcing the number of workers will be less), while decreasing some wasteful activities such as payroll processing.
But, as the outsourcing have advantages; it also has some drawbacks that are necessary to take into account before making a decision on its implementation. The main disadvantages are: dependence on third parties and possible loss of control, increased risk to the confidentiality level of the organization, and possible conflict with the outsourcing provider.
Therefore, it is necessary to take into account some important considerations for successful outsourcing agreement. The s most important are the following: develop appropriate agreements, taking into account the location of the service to be provided, should determine the level of technology use in the Outsourcing, check before you hire Outsourcing provider capacity to provide efficient service; include in the contract of outsourcing the relevant training to employees of the company, check the quality of the service Outsourcing, and establish the potential of vendor to support and network integration.
When management of an organization decides to use outsourcing services, you should consider what can be arranged and must not be hired by this system. In general, these activities can be contracted by Outsourcing: information technology, collections and marketing, general maintenance services of installations, consulting and training, and recruitment and settlement of payroll.
It is not recommended to hire these outsourcing activities: management of strategic planning, financial management, consulting services to senior management, control of suppliers, and quality management and the environment. These are all functions inherent to the company that cannot be delegated.
Anyway, hay otras ventajas importantes que deben ser consideradas en la contratación del Outsourcing, tales como las siguientes: disponer de más tiempo para enfocar la empresa en sus objetivos estratégicos; interactuar con empresas de clase mundial; disminuir los niveles de riesgo al poder compartirlos con terceros; mayor atención a los trabajadores de la empresa y fomento del trabajo en equipo; y requerimiento de menor espacio físico en la empresa.
Anyway, there are other important advantages that should be considered in the agreement of outsourcing, such as: more time to focus the company on its strategic objectives; interact with world class companies, reduce risk levels to be able to share with third, greater attention to company employees and promoting teamwork, and less physical space requirement in the company.