MANAGING TOWARDS SUPPLY CHAIN MATURITY by MACIEJ SZYMCZAK

Author:MACIEJ SZYMCZAK
Language: eng
Format: epub
ISBN: 9781137359674
Publisher: Palgrave Macmillan
Published: 2013-09-14T16:00:00+00:00

4.2.3 Offshore outsourcing

Offshore outsourcing is the practice of using the outsourcee to perform specific functions in a country other than the one where the goods or services are currently manufactured or provided (Li et al. 2008, p. 258). Recently, a growing trend towards the outsourcing of manufacturing functions to partners abroad has been observed (Hammami, Frein and Hadj-Alouane 2008, p. 643). This option helps the company in preparing a quick response to changes in demand. The scope of offshore outsourcing covers the transfer of isolated processes to be handled by collaborators operating in different countries and then coordinating the outsourced functions. An example of the application of solutions based on offshore outsourcing covers the strategies of ICT companies (Tompkins et al. 2005, p. 30). When the management boards of Dell and HP decided to offshore-outsource the production of notebooks to Singapore-based companies, they incurred much lower manufacturing costs and, in consequence, could charge lower prices. Toshiba started losing market share. To stop this process and win its market position back, Toshiba also transferred the production of notebooks to manufacturers in Singapore. These actions are an example of solutions based on offshore outsourcing, when the individual stages of production may be separated and located in countries that offer, e.g., a cost advantage. Then the semi-finished or finished products are shipped to the end customer.

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