It is termed as a complex connection of businesses where there is transfer of products from one to another. An organization with a strong supply chain network optimization will be able to deal with changes in demand, price pressures, and also increase in the number of customers. One with a weaker system will have to upgrade to a newer efficient system or be forced to face the penalties. A company may have any of the following strategies outsourcing, off-shore plants, and also manufacturing of products at its mother country.
Outsourcing is the act of giving a certain service to another company. This is done because it is economical and saves the firm the trouble of doing so. If the service is carried out by the original company, it may become expensive or provide complications due to many activities involved. This would affect the operations of the firm negatively; hence, should be avoided.
The business should consider various factors when it has decided to outsource. It should evaluate the performance of the contractor. Nowadays, businesses have no time and resources to do rework on products. The contractor should offer good products and that are of the right grade. It should also consider his compliance with regard to time; he should avail the goods in good time otherwise it would cost the business its reputation or worse being sued in court.
Investing in other countries may be a beneficial move. A company may want to have its base of operations close to the source of raw materials in order to reduce the cost of transporting such to their plants. Moreover, there may be a cheap source of labor and with the required skills. These two factors would help increase production tremendously.
Off-shore actions are a bit perilous as compared to operating at your home country. The company is faced by the risk of uncertainty. They will not be able to control output due to the distance barrier. The quality and quantity of products may not of the required standards since the priority of industry may be different with that of the parent company. These will affect negatively the whole company and ruin its good name.
Products produced at the premise of a company do not incur transportation costs. They may be used within the building and if they are to be shifted the costs would be low. These make the prices of such products relatively cheaper and of good quality, since the employees understand the culture of a company. This ensures uniformity of products; hence, a good reputation.
Despite the assurance in quality, this policy may prove relatively expensive. This is because they have to locate the raw materials and transport them to the factory. They also have to train workers on how to operate machines bought. The machines are expensive depending on use and size and may not be affordable to the organization; hence, forcing them to employ other means of obtaining the products.
However, deduction made from the above arguments is that a company has so many considerations while choosing a supply chain network. They include cost, quality of products, compliance and performance.
Outsourcing is the act of giving a certain service to another company. This is done because it is economical and saves the firm the trouble of doing so. If the service is carried out by the original company, it may become expensive or provide complications due to many activities involved. This would affect the operations of the firm negatively; hence, should be avoided.
The business should consider various factors when it has decided to outsource. It should evaluate the performance of the contractor. Nowadays, businesses have no time and resources to do rework on products. The contractor should offer good products and that are of the right grade. It should also consider his compliance with regard to time; he should avail the goods in good time otherwise it would cost the business its reputation or worse being sued in court.
Investing in other countries may be a beneficial move. A company may want to have its base of operations close to the source of raw materials in order to reduce the cost of transporting such to their plants. Moreover, there may be a cheap source of labor and with the required skills. These two factors would help increase production tremendously.
Off-shore actions are a bit perilous as compared to operating at your home country. The company is faced by the risk of uncertainty. They will not be able to control output due to the distance barrier. The quality and quantity of products may not of the required standards since the priority of industry may be different with that of the parent company. These will affect negatively the whole company and ruin its good name.
Products produced at the premise of a company do not incur transportation costs. They may be used within the building and if they are to be shifted the costs would be low. These make the prices of such products relatively cheaper and of good quality, since the employees understand the culture of a company. This ensures uniformity of products; hence, a good reputation.
Despite the assurance in quality, this policy may prove relatively expensive. This is because they have to locate the raw materials and transport them to the factory. They also have to train workers on how to operate machines bought. The machines are expensive depending on use and size and may not be affordable to the organization; hence, forcing them to employ other means of obtaining the products.
However, deduction made from the above arguments is that a company has so many considerations while choosing a supply chain network. They include cost, quality of products, compliance and performance.
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