Quản trị kinh doanh - Outsourcing

OutsourcingAt the end of this lecture, students should be able toDefine outsourcingUnderstand the advantages and disadvantages of outsourcingUnderstand the 3PL, 4PLLearning OutcomesWhat is Outsourcing?Outsourcing is contracting with another company or person to do a particular function OROutsourcing is the contracting out of a business process, usually non-core functions (which an organization may have previously performed internally or has a new need for) to an independent organization from which the process is purchased back as a service. Implicit in DefinitionsThe definitions of outsourcing include both domestic and foreign contracting, termed insourcing and offshoring. Other terms have also been developed including:Nearsourcing – the transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country.Crowdsourcing – a process that involves outsourcing tasks to a distributed group of people. Why do businesses outsource?Lack of expert-labour in some portions of the business process.Availability of cheaper labour, whilst not compromising the quality of output.Ability and feasibility to concentrate on the other crucial business process.Advantages of OutsourcingSwiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality outputConcentrating on core process rather than the supporting ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process.Advantages of OutsourcingRisk-sharing: one of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better.Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing.Disadvantages of OutsourcingRisk of exposing confidential data: When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party.Synchronizing the deliverables: In case you do not choose a right partner for outsourcing, some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner.Disadvantages of OutsourcingHidden costs: Although outsourcing most of the times is cost-effective, at times there are hidden costs involved in signing a contract across international boundaries, and this may pose a serious threat.Lack of customer focus: An outsourced vendor may be catering to the needs of multiple organizations at a time. In such situations vendors may lack complete focus on your organization’s tasks.For ExampleAn insurance company might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business. The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, 3PL’s.Types of 3PL Providers3PLs can be divided into two broad categories Asset based - Asset based 3PLs own some of the assets used in supply chain management, which often includes transportation-related assets such as trucks, distribution centers and warehouses. Non-asset based - Non-asset based 3PLs do not own such assets.  Types of 3PL ProvidersTransportation Based - may be asset or non-asset based providing usually cheaper haulage services for firms.Warehouse/Distribution Based - Many have former warehouse and/or distribution experience. Forwarder Based - Very independent middlemen with forwarder roles. Financial Based - Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory. Information Based - Significant growth and development in this category of Internet-based, business-to-business, electronic markets for transportation and logistics services. akpe na mi!