Posted: December 24th, 2024
The Sourcing Decision: Location of Function
Outsourcing- purchasing from someone else a product or service that had been previously provided internally
- Avoid outsourcing distinctive competencies
Offshoring- the outsourcing of an activity or a function to a wholly-owned company or an independent provider in another country Disadvantages of outsourcing and offshoring
- Customer complaints
- Long-term contracts
- Ability to learn new skills and develop new core competencies
- Lack of cost savings
- Poor product quality
- Increased transportation costsErrors in Outsourcing Efforts
- Outsourcing the wrong activities
- Selecting the wrong vendor
- Poor contracts
- Personnel issues
- Lack of control
- Hidden costs
- Lack of an exit strategy
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