How companies evaluate their offshore outsourcing activities? : A study of the challenges and opportunities associated with outsourcing to different countries
Attias, Irina (2014)
Attias, Irina
Metropolia Ammattikorkeakoulu
2014
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201405269928
https://urn.fi/URN:NBN:fi:amk-201405269928
Tiivistelmä
Companies outsource their manufacturing for cutting costs and to be able to concentrate on their core competences. Offshore outsourcing reached its peak less than 10 years ago but nevertheless today’s literature has started to argue whether offshoring brings true long-term profits for companies that practice it.
Whereas many multinational enterprises work on bringing their production back to their home countries, small and microenterprises seem to have only the option of offshore outsourcing. This is due to high costs and large minimum order quantities among other things. In Finland, half of all companies with less than 100 employees outsource their production to other markets: new EU member states in Eastern Europe and Asia.
Supplier selection and outsourcing are strategic decisions and therefore should be linked to the procurement strategy and to the company strategy. These decisions affect the whole organisation, which is why PESTLE factors such as the legal, geographical, cultural and infrastructural factors bring various advantages and challenges.
Whereas Taiwanese manufacturers offer experience, flexibility and low price production, especially in the electronics sector, EU countries offer consistency of quality and reliability on lead times. As global sourcing involves a variety of benefits, it will likely continue to be a popular method in the manufacturing industry. Therefore, it is essential to establish a neutral method of evaluation for the suppliers around the globe. Transforming qualitative data into more easily workable form is the main outcome of the research that is demonstrated by different examples from Taiwan, Estonia, UK and the Netherlands.
Whereas many multinational enterprises work on bringing their production back to their home countries, small and microenterprises seem to have only the option of offshore outsourcing. This is due to high costs and large minimum order quantities among other things. In Finland, half of all companies with less than 100 employees outsource their production to other markets: new EU member states in Eastern Europe and Asia.
Supplier selection and outsourcing are strategic decisions and therefore should be linked to the procurement strategy and to the company strategy. These decisions affect the whole organisation, which is why PESTLE factors such as the legal, geographical, cultural and infrastructural factors bring various advantages and challenges.
Whereas Taiwanese manufacturers offer experience, flexibility and low price production, especially in the electronics sector, EU countries offer consistency of quality and reliability on lead times. As global sourcing involves a variety of benefits, it will likely continue to be a popular method in the manufacturing industry. Therefore, it is essential to establish a neutral method of evaluation for the suppliers around the globe. Transforming qualitative data into more easily workable form is the main outcome of the research that is demonstrated by different examples from Taiwan, Estonia, UK and the Netherlands.