Outsourcing Apparel Manufacturing and The Effect on Profitability of a Company X
Karvonen, Elisa Katriina (2021)
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202104164984
https://urn.fi/URN:NBN:fi:amk-202104164984
Tiivistelmä
This project thesis was created primary for the benefit of the commissioning company; an SME in the fashion industry in Finland designing, manufacturing and selling women’s apparel and accessories. The project includes a supplier analyses of potential outsourcing partners and classification together with a cost-volume-profit analyses based on the cost of outsourcing the product manufacturing function of the case company.
The thesis had an aim to give more insight on the potential suppliers, provide tools for making outsourcing decisions in the form of a supplier classification tool and the profitability analysis on the two most potential supplier partners in manufacturing. The results of the cost-volume-profit analysis provide valuable information in how the case company can make more profitable decisions in producing and selling the different products in their product mix.
The case company is in their starting point of outsourcing manufacturing, therefore the information provided in this project will give valuable and practical tools for leading more profitable business.
The thesis has been divided into two main sections; the theory part combining supply chain management and managerial accounting methods, and the analysis part of supplier analyses, classification and a cost-volume-profit analysis.
The results of the thesis elaborate that the supplier selection and analysis consist of many variants and that the evaluation process should be conducted in detailed manner and tracking the actual results each supplier performs. The results of the CVP analyses emphasize that the volume of sales and the contents of the sales mix have a great impact on the operating income, and different sensitivity analyses should be executed to have the most reliable answers on the most profitable supplier partners. It is highly recommended to partner with multiple suppliers to reduce risks, increase total contribution margin and find the most cost-efficient suppliers for materials in manufacturing apparel.
The thesis had an aim to give more insight on the potential suppliers, provide tools for making outsourcing decisions in the form of a supplier classification tool and the profitability analysis on the two most potential supplier partners in manufacturing. The results of the cost-volume-profit analysis provide valuable information in how the case company can make more profitable decisions in producing and selling the different products in their product mix.
The case company is in their starting point of outsourcing manufacturing, therefore the information provided in this project will give valuable and practical tools for leading more profitable business.
The thesis has been divided into two main sections; the theory part combining supply chain management and managerial accounting methods, and the analysis part of supplier analyses, classification and a cost-volume-profit analysis.
The results of the thesis elaborate that the supplier selection and analysis consist of many variants and that the evaluation process should be conducted in detailed manner and tracking the actual results each supplier performs. The results of the CVP analyses emphasize that the volume of sales and the contents of the sales mix have a great impact on the operating income, and different sensitivity analyses should be executed to have the most reliable answers on the most profitable supplier partners. It is highly recommended to partner with multiple suppliers to reduce risks, increase total contribution margin and find the most cost-efficient suppliers for materials in manufacturing apparel.