What recent changes have caused supply chain management to gain importance? Outsourcing is one major turning point in the field of operational management. It isn’t something that’s new in logistics. Business process outsourcing started even before it earned a name and became a business trend. Some companies choose to hire the services of trucking companies rather than having their own fleet. As time passed by, innovations gave rise to supply chain managements’ importance. Major economies outsourced functions such as capital, people, technology and facilities.
They hired the skills and talent of people from other nations to provide efficient and cost-reduced business processes like in the field of healthcare, finance and data management. This business innovation has been a driver in supply chain management evolving into a global function. Due to the wide recognition business outsourcing has received, it has been an imperative in conducting global business. This perception has created importance to supply chain management. 2. With so much productive capacity and room for expansion in the United States, why would a company based in the United States choose to purchase items from a foreign firm?
Discuss the pros and cons. This is synonymous to the concept of outsourcing wherein the underlying principle is to reduce labor costs and increase level of productivity and quality of services being offered. There are a lot of benefits derived out of this concept. You get quality level of services at reduced costs thereby increasing your profitability, productivity, value and more and at the same time you save on time, effort, infrastructure and manpower. However, the downside of this is when your company has a union and you decide to outsource other business functions.
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This issue has been raised even before. This is a matter of internal conflict amongst the people within the company. 8. Describe how outsourcing works. Why would a firm want to outsource? Outsourcing is a work arrangement made by an employer who hires the services of an outside contractor (offshore) to perform business functions that could be done by company personnel. Nowadays, more and more companies would rather prefer to outsource because it only makes sense to your business to do so. But why would you want to outsource?
There are several reasons to opt for outsourcing and let me lay down the cards for you. First, outsourcing provides you access to cost-effective services. In short, you get the same level of quality for the services for a lower cost. These kinds of services are best offered by the Philippines and India not only because they provide skilled workers but also the labor is cheap. Now, by reducing your business costs, you can expect an increase not only in terms of profit but also in productivity, level of quality, business performance, value and more.
Most importantly, when you outsource you get to save a lot in every aspect of your business --- you can save on time, effort, infrastructure and manpower. Through outsourcing, you can delegate your non-core businesses functions helping you to concentrate on your core business functions. Once you have delegated non-core functions, your outsourcing partner will be able to provide faster deliverables and you in return can make quicker deliveries to your customers. In doing so, you can expect an increase in customer satisfaction as well. Through outsourcing, the offshore countries also benefit.
The economies of these countries have tremendously increased since the boom of business outsourcing. In India and the Philippines, the economy has increased, jobs have escalated and the wages are higher than other industries. Financial services, healthcare services, software services, E-learning services, data management are just some of the outsourcing services being offered nowadays. By outsourcing, you help not only your business but other economies also. Page 444 3. What are some capacity balance problems faced by the following organizations or facilities?
a. An airline terminal. One would be determining the number of aircrafts that an airfield configuration can accommodate during a specified interval of time, when there is continuous demand for service. Same scenario would apply in terms of accommodating passengers in the airport. b. A university computer center. The most common problem encountered is how to equate the number of students/customers to the number of computers available. In most cases, there are more students waiting for their turn than the computers available. c.
A clothing manufacturer. The problem arises when there is more demand compared to that of supply. The manufacturers need to find way by meeting the demands with that of supply to avoid demand and supply conflicts. 6. What is capacity balance? Why is it hard to achieve? What methods are used to deal with capacity imbalances? Week 5 Problems Page 424 1. Calculate the break-even product value of using Express Mail (overnight delivery) versus Parcel Post (three-day delivery) for sending a package from Peoria, Illinois to Memphis, Tennessee.
The following table contains the appropriate costs. Assume that inventory carrying cost is 25 percent per year of the product value and that there are 365 days in a year. Please use table data on page 424. Page 445 1. Always Rain Irrigation, Inc. , would like to determine capacity requirements for the next four years. Currently two production lines are in place for bronze and plastic sprinklers. Three types of sprinklers are available in both bronze and plastic: 90-degree nozzle sprinklers,180-degree nozzle sprinklers, and 360-degree nozzle sprinklers.
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