Procurement Outsourcing Strategies Management †Free Samples

Question: Discuss About The Procurement Outsourcing Strategies Management? Answer: Introducation Based on the facts coming up from the analysis of functionality of Wonderful Widgets, the best procurement strategy that would be aligned with the needs of the company is Minimising Total Landing Cost. The component is a functional product, and it is evident that profit impact and supply risk are low. The company can, therefore, be assisted in bringing about a reduction in the overall operational costs. Wonderful widgets can be best served if outsourcing is done and this strategy is used. The company has the ability to produce the component in an internal process. However, this might add to the operational costs as a result of variable and fixed costs related to production. Since the company does not consider a competitive advantage, the value placed on the component and clockspeed, the idea of outsourcing through this methods would be justified. According to Gollenia, the recent years have witnessed markets becoming highly global in nature. Increased competition among the companies has been a driving force behind companies coming up with efficient and cost-effective supply chain strategies and production methods. Using the procurement strategies, companies can solve a number of tactical, strategic and operational issues. For finding the lowest total landed cost, Wonderful Widgets needs to consider strategies for thining the supply chain as an array of discrete functions. The goal would be to reduce the cost of that as a whole. The approach would be out-of-the-box. Implementation Once the strategic approach is conceived for lowring the total landed cost; the next step would be to model it. This can be done with the help of spreadsheets, which are cumbersome. Modelling software is usually expensive, and the learning curve is steep. Therefore outsourcing the model development would be a good idea. An expert in supply chain design and operations would be useful. It would be advantageous not to model a pre-conceived solution and then wait for the results. Comparing outsourcing sources between different countries, or parts of the same country is imperative. This would test and quantify the trade-offs between a shorter chain that is less inventory but having higher unit costs, and a longer chain that is more inventory but having lesser unit costs. The models quality would depend on the quality and quantity of the data. Models can also be time-dependent; so this factor needs to be considered. With a proper model at disposal, and a focus on total landed cost reductio n, the supply chain would surely witness a significant change. The challenging aspect of the scenario completed is the shortage of time needed for bringing about the required change. It had been decided upon that the change in outsourcing practice had to be brought about within the quarter of the year as evaluation would be done on a quarterly basis. Strategic alliances have a significant impact on procurement outsourcing strategies. There are a number of advantages gained by the company considering outsourcing in relation to the economy. The first advantage is economies of scale (EOS). Orders allow suppliers, with whom strategic alliance has been made, to take advantages of EOS and consequently reduce manufacturing costs. Reduced capital investment and focus on core competencies are the other positive impact. Lastly, increased flexibility is a feature of alliances that can be formed with different companies as desirable (Erasmus et al.). References Erasmus, Barney, Johan Wilhelm Strydom, and Sharon Rudansky-Kloppers.Introduction to business management. Oxford University Press Southern Africa, 2016. Gollenia, Lars Alexander.Business transformation management methodology. Routledge, 2016.