Assalamualaikum w.b.t
Today we want talk
about the strategic outsourcing in one company. Outsourcing can be defined as
the complete transfer of a business process that has been traditionally
operated and managed internally to an independently owned external service
provider. Complete transfer means that the people, facilities, equipment,
technology and other assets are no longer maintained internally once the
business process is outsourced. Then outsourcing also sometimes thought to be
similar to subcontracting, joint venturing and contract manufacturing.
Outsourcing consider, firms are evaluating whether or not to reverse a prior
decision to make. Outsourcing reshapes a firm’s boundaries.
Why the
organizations do outsourcing business process? Lower operational and labor
costs are among the primary reasons why companies choose to outsource. When
properly executed it has a defining impact on a company’s revenue recognition
and can deliver significant. Some generic strategic benefits of outsourcing
are:
1. Cost minimization
-
Accomplished by reducing direct
operating costs, eliminating overhead costs and transforming fixed costs into
variable costs.
2. Refocusing the organization to its
core competencies
-
Accomplished by focusing what the
organization does best and/or transforming the business to focus on new
products and services.
3.
Improvement in operating
performance
-
Increasing quality, increasing
productivity and obtaining new capabilities technologies from external sources.
4.
Increased market share and revenue
-
Assessing the providers’ network
and accelerating expansion into new markets.
Specific benefits of outsourcing:
1.
Reduce and control operating
costs.
2.
Improve quality.
3.
Change company focus.
4.
Acquire external capabilities.
5.
Refocus scarce resources for
alternative uses.
6.
Reduce cycle time.
7.
Obtain cash infusion.
8.
Reduce risks.
The element of startegic outsourcing is 5
steps. It is:
1.
Strategic evaluation.
2.
Financial evaluation.
3.
Supplier selection and sourcing
model.
4.
Managing relationships.
These steps can and should be modified to fit
the spesific organization and outsourcing objectives. This steps is important
in order to achieve continuous improvement and communication between the
required outsourcing activities. The strategic evaluation and financial
evaluation is before the company outsource. Supplier selection and contracting
is during outsource and transition to external sourcing model and managing
relationships is after the company outsource.
First step is strategic evaluation. That is a
discussion of the make-or-buy decision will be helpful in analyzing what may or
may not be good strategic candidates for outsourcing. The make-or-buy decision
is to understand the strategic importance(value) of the activity or system.
Second step is financial evaluation. That is
critical to ensure that outsourcing makes short-term and long-term financial
sense. Many cost are only relevant when considering international sourcing
alternatives or are only pertinent when considering the outsourcing of
manufacturing activity.
Third step is supplier selection and contract
development. The supplier selection is identify and investigate a potential
supplier is for the buying firm to compile supplier profiles for each potential
supplier. Knowledgeable about all potential supplier and aware of how they are
rated by each function within the buying firm. The buying organization should
clearly establish expectations for the potential suppliers and discuss the
scope of work and the appropriate pricing for the outsourcing activity. The
contract development is key to effective governance of the relationship between
the two independent firms.
Step four is transition to external sourcing
model. The transition will be 3 criteria. That is:
1.
Communication criteria – how
should the external initiatives be communicated to the affected and unaffected
employees.?
2.
Personnel criteria – what packages
will be offered to affected and unaffected employees.?
3.
Transition criteria – when will
the activities and resources be moved to the supplying organization.?
The last step is
relationships management. That is the organizations work together using their
specialised resources innovatively to achieve goals and objectives. Then the
organization should be active in monitoring and evaluating performance and
solving problems.
If any constructive ideas can be added in the spaces comment below.That all.
If any constructive ideas can be added in the spaces comment below.That all.
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