Supply Chain Management and Outsourcing

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What is Supply Chain Management?

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The integration of activities that acquire materials and services, transform them into intermediate goods and final products, and deliver them to customers.

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What are the strategic challenges of global supply chains?

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Quality production, unreliable distribution systems, tariffs, quotas, political and currency risks.

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What is Outsourcing?

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Procuring from external suppliers services or products that are normally a part of an organization.

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What are the advantages of outsourcing?

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Cost savings, gaining outside expertise, improving operations and service, focusing on core competencies, gaining outside technology.

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What are the disadvantages of outsourcing?

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Increased transportation costs, loss of control, creating future competition, negative impact on employees, longer-term impact.

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What is the Theory of Competitive Advantage?

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Countries benefit from specializing in products and services in which they have relative advantage and importing goods in which they have a relative disadvantage.

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What are core competencies?

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Unique skills, talents, and capabilities that a firm does better than its competitors.

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What ethical principles should be upheld in outsourcing?

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Seek to do no harm to indigenous cultures, uphold universal labor standards, and pursue long-term involvement in foreign countries.

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What is the role of ethics in supply chain management?

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Ethical decisions are critical to the long-term success of any organization, especially in supply chains where opportunities for unethical behavior are significant.

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What should organizations avoid in outsourcing agreements?

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Using outsourcing in a way that violates religious holidays, takes advantage of cheap child labor, or violates basic human rights.