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Impacts Of Outsorcing On Organisation Essay

2914 words - 12 pages

The challenges ahead for supply chains: McKinsey Global Survey results
Senior executives say their companies manage key trade-offs well, yet see barriers to better performance: rising risk, lack of collaboration, and low CEO involvement.
November 2010
As economies around the world step back from the financial brink and begin adjusting to a new normal, companies face a different set of supply chain challenges than they did at the height of the downturn—among them are rising pressure from global competition, consumer expectations, and increasingly complex patterns of customer demand. Executives in this McKinsey survey1 are divided on their companies’ preparedness to meet those ...view middle of the document...

This suggests that companies anticipate returning to a new normal,3 wherein they can focus on issues other than cost at least some of the time.
The Supply Chain Challenge
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Integration with partners presents many challenges in the high-technology industry. Information technology, electronic component, semiconductor manufacturing, and telecommunications companies all face challenges in their supply chain.
Companies compete based on their capabilities and their supply chain. Because partners frequently have a major role in a company's supply chain, many companies also compete based on their partner's capabilities and supply chain. Many companies outsource functions that are not their core competencies. Partners frequently hold and manage inventory. Therefore, companies frequently differentiate themselves by how they connect and collaborate with their partners.
If a high-technology company does not have an integration solution, the following issues can pose significant challenges.
Supply Chain Complexity
Many high-technology manufacturers have long and complex supply chains. These supply chains may involve a number of partners, suppliers, and buyers. This can mean a complex set of transactions and a diverse set of interactions. A manufacturer may have to set up communications based on what they have used previously, what their or their partner's capabilities are, and what their partners require. That can mean creating business processes customized to each specific partner. It can also mean that partners use a variety of communication devices to exchange data, instead of typically relying on a single, primary data connection. The following figure shows an example of two partners who must contend with many different communication devices in their supply chain.
The manufacturer may exchange a Request Price message through a fax with one partner and through EDI with another. They may exchange a partial cancellation message through telephone with one partner, and through e-mail with an attached Microsoft Excel spreadsheet with another. Communications may be manual, such as by telephone, fax, regular mail, or e-mail with Excel spreadsheets. Alternatively, they may be automated, using EDI, FTP, or binary files.
This diversity increases the complexity of the supply chain, and frequently increases the amount of manual processing and custom programming. This can make development, deployment, maintenance, and upgrading of the supply chain very difficult. It makes it difficult for companies and their partners to adapt to new developments, because change management is difficult. Making a change to a single trading partner connection can mean lots of work. Applying that change to the complete supply chain can be overwhelming.
Response Time
One key to managing a supply chain is to know what the customer demand is, and what partner supplies are. However, it can be difficult for a high-tech...

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