COMMERCE 4OD3 Lecture Notes - Lecture 3: Call Centre, Insourcing, Outsourcing
13 Dec 2018
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Document Summary
It is important to select suppliers after careful analysis and evaluation. Reasons for new supplier: cost reduction, quality concerns, delivery concerns, production capacity concerns (over/under, new products, dual-or multi-sourcing requirement. Make or buy the make option represents: manufacturing of products or providing services using internal resources, managing internal resources to manufacture goods or provide service, eg. Outsourcing it processes, third party logistics service provider. Which factors favor making: cost consideration, desire to integrate plant operations, use of excess plant capacity, control over production and or quality, design secrecy required, unreliable suppliers. Factors favoring buying: limited production facilities, cost considerations (less expensive to buy, small volume requirements, suppliers specialized know-how, stable work force (rising scale, multisource policy. In a cost analysis, the total cost of ownership needs to be considered. Make: delivered purchased material costs, direct labor costs, any follow-on costs stemming from quality and related problems.
