Outsourcing Is An Operations Management Tool - 876 Words

Outsourcing is an Operations management tool that is being used more and more by organisations in the effort to seek and maintain competitive advantage. Discuss the history of and reasons for using outsourcing the advantages risks and how you would mitigate those risk using examples of success and failure to illustrate your answer. Outsourcing has become increasingly commonplace in businesses today. Outsourcing is defined by â€Å"the strategic use of outside resources to perform activities traditionally handled by internal staff and resources† Outsourcing is a relatively new operations management tool that began to be used around the time of the Industrial Revolution. This arose out of major technological advances in transportation in the form of the railway and canals and in communication in the form of the telegraph which allowed organisations to expand beyond their . According to Joanne Yates ‘the spread of the telegraph and of railroads encouraged firms to serve larger regional and national markets.’ This evidenced by a rise in small engineering and architecture consultants. It wasn’t until the 1970’s that outsourcing began to become more popular. The 1970’s marked the rise of computer technologies where companies began to research into home computer systems. Also in the late 1970’s communist China opened its doors to global trade. In manufacturing, the largest cost is labour therefore offshoring manufacturing to developing nations such as China where the cost of labour isShow MoreRelatedOutsourcing And Offshore Outsourcing : Outsourcing1038 Words   |  5 PagesRunning Head: Outsourcing and Offshore Outsourcing 1 Outsourcing and Offshore Outsourcing Natasha Bing Grantham University Outsourcing and Offshore Outsourcing 2 Abstract (Greaver, 1999) proclaims that outsourcing is of a strategic nature and that the decision-makingRead MoreCustomer Relationship Management ( Crm )1359 Words   |  6 PagesERP systems bring together all aspects of operations and supply chain management, from raw materials to customer relationship management (CRM). Electronics retailer Best Buy found that the use of demand management tools increased price optimization, which in turn increased inventory turns by 50% (Blanchard, 2010). Other tools, like benchmarking, are also immensely valuable as automobile manufacturer Hyundai discovered. 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It is moreover in to sales and services. This case is about the replacement of Futronics’s central office stores by an outside service provider. In this case supply management manager have an opportunity for investigating selected outsourcing in-house services. Cost Status of the Company Description | Making Cost in Total | Buying cost in Total | Size of company: Raw | 2 Billion Dollar | | Cost of Goods sold | $ 900,000 | | Average Inventory