Benefits and Risks of Outsourcing the Global Supply Chain
Write the discussion and answer peer’s discussion using a small one paragraph for each.
Globalization has created many opportunities for organizations. There are many advantages and ways to create value through outsourcing portions of one’s global supply chain. For each opportunity, there are also many ways for the project to run into problems.
In your initial post, address the following:
Identify one example of an organization that created value for itself through outsourcing part of its supply chain. Provide a link to one resource.
Identify the benefit that occurred.
How did this benefit help the organization create value? Who was the value created for—the organization, or the customer?
In your replies to at least two peers, discuss potential risks of outsourcing for the examples they provided—for example, risks to supplier quality or stability, intellectual property, or reputation. The following questions may help develop your responses:
Can you provide an example of an organization that started outsourcing the supply chain and then stopped? What risks did the organization face that caused them to stop the project?
Can you provide an example of an organization that outsourced similarly and faced reputational damage due to the project?
Peer’s discussions:
1-Donisha
One example of an organization that created value for itself through outsourcing part of its supply chain is Apple Inc. Apple outsourced its manufacturing process to Foxconn, a Taiwanese electronics manufacturer, and subcontracted various components to other companies.
The benefit that occurred from this outsourcing was cost reduction, as Apple was able to take advantage of lower labor costs in countries like China where Foxconn was based. Additionally, outsourcing gave Apple access to specialized expertise and technology that might have been difficult or costly to develop in-house.
This cost reduction benefit helped Apple create value for both the organization and the customers. By lowering their manufacturing costs, Apple was able to offer its products at a competitive price to customers, thereby increasing sales and market share. The lower pricing also made Apple products accessible to a wider range of customers, thereby increasing consumer satisfaction. Overall, outsourcing helped Apple create value for both the organization and its customers.
Source: https://hbr.org/2013/09/apple-a-supply-chain-model-of-efficiency
2-Viviana
Outsourcing is beneficial to many companies to increase profits, reach target goals, have faster production speeds, or have better talent. Some organizations that have done this are Microsoft, Samsung, Sony, and many others.
The company I chose is Apple Inc. Apple has been outsourcing there suppliers and labor for many years. This has allowed them to benefit from reduced production costs, larger capacity, and more control over production quality. This created value for Apple by increasing profit margins and added extra quality value and demand needs for consumers. One of Apple’s largest outsourcing partners in China. This is due to the production speed and the talent pool that China has (Kasyaneko, 2019). Through outsourcing, Apple has given benefits to both its consumers and its self by becoming the biggest competitor in the smartphone industry!
Kasyaneko, Sophia. (2019). iPhone Made in India: Apple Outsourcing Strategy. https://medium.com/@Ralabs/iphone-made-in-india-apple-outsourcing-strategy-fff490580cf9
