Muskan Ltd, received a new order
of 25,000 toys. Mr. Ajay, the
production manager is expected
to deliver goods in twenty days
btherwise the order will be
cancelled. To retain the consumer
Ajay is planning to outsource the
production of 15,000 toys and
deliver the order on time. The
outsourcing of production will
result in increase in cost by 50%.
Do you think Mr. Ajay will be able
to perform his responsibilities
effectively and efficiently? Give
reasons. my contact 8536010375
Answers
Answer:
Outsourcing a manufacturing process is a high-risk, high-reward proposition. Cheaper, quicker and more flexible production is possible through outsourcing, but you’re at risk of facing serious financial or legal problems that could sink your entire business.
Despite these risks, the benefits are compelling and the opportunities are growing: A recent Gartner survey shows 65 percent of manufacturers currently outsource parts of their production, and another 21 percent plan to outsource in the next couple years.
Outsourcing isn’t to be taken lightly or without help. By considering these three key factors, manufacturers can avoid common pitfalls and strategically outsource non-core parts of production to significantly improve efficiency while reducing cost.
Determine What Processes Are Not Core to Your Business
Outsourcing strategically means picking specific parts of production for partners to complete—parts that are not core to your business.
Some production processes can be performed by external partners more quickly, at a higher ROI and with specialized technology. In a case like this, it behooves you to outsource, says William Crane, founder and CEO of IndustryStar Solutions, which provides on-demand supply chain and technology services.
“If [the process] is not a core competency of your firm and it’s just a task that needs to be done as part of the value chain,” he says, “some of the more forward-thinking companies are asking, ‘Should I be in that business?'”
Crane works with many small and midsize businesses (SMBs) to help optimize parts of their supply chain. A major aspect of his company’s work includes analyzing the manufacturing components within a business to find parts appropriate for outsourcing.
First, manufacturing managers should establish clear business goals for outsourcing during discussions with other departments. Remember that there are many more potential benefits from outsourcing than just cost savings. These benefits may be increased flexibility and reliability or the ability to free up time to focus on other initiatives.
Next, review all the manufacturing components for the process you intend to outsource. Crane recommends evaluating five factors of each process to determine whether it’s a fit for outsourcing:
Cost: Will outsourcing this process reduce my costs?
Skill: Do external providers have the skills necessary to perform this process?
Risk: Does outsourcing this process create a risk for my company?
Speed: If I outsource this process, will it result in faster production?
Innovation: Will outsourcing this process give my company a competitive advantage?
The risk factor is important—outsourcing without the right preparation or oversight can lead to disastrous results.