Outsourcing in the business is a practice in which one organization hires another one to performs certain tasks or be in charge of some operations that are within their loop. The organization hired has been conducting the same functions which make it easy to run the activities they have been assigned. The organization hired is called the service provider or third party. The company that has been hired arranges their system and employees to perform the task they have been assigned. Currently, a company can outsource various task depending on their operations (Muchengeti, 2017). The services of outsourcing at a time involves transport. There are multiple reasons as to why a company outsources. Outsourcing is going to help the organization focus on the supply chain and how to be competitive in the market. For example, the corporation may decide to focus on the external and internal logistics and transportation to maximize its production by focusing on the supply chain. Also, the company is relief from some responsibilities and make the management to feel some sense of relief. There are outsourcing agreements where the company that is going to provide services must satisfy consumers. The paper is going to discuss outsourcing and the chain supply in companies.
Outsourcing is something valuable to the organization as it helps in minimizing the cost of operations. An example of outsourcing is acquiring the services of an expert. The company benefits from the experts and uses their skills, experience, and connections to reduce expenses that would have been incurred. The supplier of redistributed administrations takes a report of the coordination with other asset suppliers to actualize the most financially of the SC designs. Besides outsourcing some parts of the company operations, consumer demand should be met. The company avoids stagnation due to deficient of the supply assets due to limited or no resources to maintain their level of demand. Hence, it is complicated for an organization to develop a brand and maintain it in the market. Outsourcing helps the company to adopt with the demand consumer demands and at the same time provide a balance between the two. Therefore, supplies consumers to mitigate their demand.
Outsourcing has various benefits which help an organization to run its operations smoothly. The agreement between the two organizations build trust consumer satisfaction is the core principle. As industry progress, there is a need for quality and reliable services to fit in the global market. Outsourcing helps the organization and use services of another which has already established its standard in the market. Tactically outsourcing of the supply chain is beneficial to the organization. It allows management to focus on new ventures and other things that are beneficial for the growth of the business. One benefit of outsourcing supply chain is secure. There is assured security in the supply of the products since the organization taking charge has specialized in those operations. Hence, they are experts who are ready and willing, and they ensure competency, control, visibility, and security of all the inventories. It provides there is optimization of the stock by identification of the sources and preparation of the audit of the supply chain. Also, it mitigates the risk of the supply chain that may be occurred. Hence, one organization benefits from the operation of the other.
Another benefit of outsourcing is to meet consumers demand. All business strives to make consumers satisfied with their services. They alter their operations to ensure they fit consumer's requirements. It is the key to any business success to keep consumers happy with the services provided. The business strives to be consistency to meet consumer's demands. Hence, they have to ensure consumer recognize their services and keeps them happy all the time. They aim to keep the demand required in the market to avoid fluctuation at any stage. They mitigate the risks and ensures the business does not run into a shutdown. Shutdown can lead in damaging of the profitability of the organization and its relation with consumers. Hence, outsourcing helps the organization to maintain a good relationship with its consumers (Finn, 2017).
Another benefit of the supply chain is to increase capabilities. The company may be suffering from unlimited resources to run the supply chain. It may result in reducing the ability of the organization fitting to such operations. Adding of an external partner brings the tool one is limited and makes supply chain easy to handle (Finn, 2017). The external partner is an expert who brings solutions, ideas, and capability that was lacking in the operations. The partner enables an ability that was lacking and makes it easy for the organization to strive in the supply of its products. Most of the supply chains companies utilize PPI (practical process improvement).
Outsourcing the parts of the supply chain accompanies some operational difficulties. The first is a combination. The activities of the organization runs smoothly once the service provider is involved in the process of the coordinating and harmonizing. However, the problem is with the procedure used to ensure progress, it requires a time and plenty of resources to as help all operations run uniformly. A little misinterpretation of the information results in delays or disaster which affects the entire supply chain of the organization. Also, there is an issue with the operations, outsourcing is characterized with unexpected expenditures. In a perfect business environment, companies' should enjoy efficiency and boost their savings once they outsource some operation. The issue is there is various number of hidden cost that accompanies outsourcing of the company operations. some of the hidden cost that are incurred and yet not accounted fort include tax, and changing cost of shipment which can be higher, and they affect the initial cost budgeted.
The global supply chain is something evolving due to pressure from Omni-channel and e-commerce. The two concepts that affect supply chain are distracting people, and some do not understand their essence while at the same time how they operate. The supply chain falls short on the transportation sector. Most of the programs are well oriented and focus on the transport and logistics sector but fails on transportation. A research was conducted to determine the level of education and logistics of the issue in the supply chain. The study is like a guide to all the managers on the issues to keep an eye on in the coming years (McCrea, 2017). Transport is an area that has a gap. There is likely hood that the difference is going to be breached by universities.
Social media is vital to the SC part of an organization, and should pay close attention to the same. Most of the supply chain get stuck at the starting point because they do not manage to get beyond social media. The mention of the word social media executive thinks about LinkedIn, Facebook, Twitter among others. There is a social media network, but they lack any context of the supply chain and it logistics. The main question is how social media is going to manage their transport and manage the warehouse. It acts a block and causes a lot of problems to the enterprise. Another is resistance to change. Using new technology is challenging and this an individual to avoid the use of social media. They tend to stick to their old habits as they consider it to be the faster and most comfortable way of handling the operations. The graph below shows how social media is a significant obstacle to the supply chain. Social media is advantageous but can act as an obstacle (Gonzalez, 2015).
Sustaining of the supply chain in recent years has been received extensive attention. It is a field that has not entirely been explored. It only has theoretical framework importance. Supply chain sustainability is vital. The table below examines supply chain management by use of triple bottom line (Enze, Liwei, Weihua, &Wanying, 2017). The classical framework used in supply chain management explains it basis. All the identified structure helps to sustain supply chain.
In conclusion outsourcing of supply chain has both positive and negative outcomes. The positive outweighs the negative ones. Outsourcing of the supply chain helps an organization in various ways. One of the ways it helps an organization is by the provision of security making supply visible. Also, it allows an organization to focus on other strategic issues affecting the organization. It saves resources as another operation takes control of the supply chain leaving the other to run different operations. Also, it enhances competitiveness as the company providing services strives to meet the consumer demand. The main obstacle faced by the supply chain is transportation and social media.
Adrian Gonzalez. (2015). The Social Side of Supply Chain Management - Supply Chain 24/7. Retrieved from http://www.supplychain247.com/article/the_social_side_of_supply_chain_management_all_pages
EnzeBai, Liwei Liu, Weihua Liu, and Wanying Wei (2017). A Framework of Sustainable Service Supply Chain Management: A Literature Review and Research Agenda. Retrieved from https://www.mdpi.com/2071-1050/9/3/421/htm
Finn, A. (2017). 6 Benefits to Outsourcing Your Supply Chain - Doe & Ingalls. Retrieved from https://www.doeingalls.com/6-benefits-outsourcing-supply-chain/
McCrea, B. (2017). Logistics and Supply Chain Education: Opportunities Abound - Supply Chain 24/7. Retrieved from http://www.supplychain247.com/article/logistics_and_supply_chain_education_opportunities_abounds/NASSTRAC
Muchengeti, K. L. (2017). An investigation of the effectiveness of outsourcing and its impact on organisational performance: case of Unki Mines.
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