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Global Operations and Supply Chain Management

Global Operations and Supply Chain Management

Global Operations and Supply Chain Management

Global operations management

Operations management is related to the administration of the business practices in order to create a high level of business efficiency in an organization by converting the material and the labor in the form of goods and services in an efficient manner for maximizing the profit of the firm. Whereas the Global Operations Management has the state of art knowledge on how to manage the operations in the global environment. It will involve the global issues related the operations which are important and relevant to the company ability to collaborate with the supply chain partners for them to remain strong and competitive globally. It allows for the understanding of the global services, manufacturing, consulting companies.

Companies of all the sizes adopt globalization for different reasons. And the international trade has increased massively in the recent years and the transfer of the goods, services and capital is having a huge effect on the economies throughout the world. And in this scenario the understanding of the international operations management is very important for the practitioners. International companies played a very important role in the operations management in the whole world (Sameer Prasad, 2000)

Advantages and disadvantages of global procurement

A lot of the services companies have started to create job overseas for them to gain access to the foreign markets easily. They have to consult, repair and audit at the places where the customers are situated rather than telling the customers to go to them. The growth has been seen in the foreign markets and the domestic ones are saturated and matured already. The time of the isolationism has already passed and 60 % of the revenues of America is coming from overseas. This globalization can be seen in many sectors like banking, customer’s products, jobs, and these revenues exceed to the domestic ones.  Some of the businesses hire workers from other countries because of the limitations of immigration due to which they send the work there. And all this happens with the advancement of technology by outsourcing the work. This method help them to gain lower costs in both domestic and foreign. Telecommunication is done through homes sometimes which extends the suppliers both at the home and abroad. The most common type of outsourcing is telecommunication and customer service in the US where this work gets done through low cost areas. Most of the companies try to make core competencies which is a little difficult and thus make the end value of the product. A lot of companies outsource their work to the others. But sometimes there are a lot of problems in the out sourcing and the companies do not outsource management, accountability, responsibility and other services. On the other side outsourcing or global procurement can help the companies to survive in very competitive markets. Outsourcing can help in having global coverage around the clock. A unilateral policy cannot be adopted when the others are doing so. So a different type of strategy has to be made which makes the business successful. It is important for the companies to have some exposure in this area to get more newsworthiness. American companies are gaining a lot of advantages in this regard as they are outsourcing call centers and data entry type of works from developing countries and the insourcing generated more management, engineering baking related services. However necessary precautions need to be taken here in the current practices of the business in the outsourcing. Companies taking this approach just because everybody is doing it may be very surprised to see that it has unexpected costs and complications involved. Almost half of the contracts get terminated because of a lot of reasons. Some may face financial problems others might be already engaged in other projects. Some companies face a setback when the companies that are outsourced find another project that is more interesting and leave theirs (Weidenbaum, 2005).  Sometimes the desired outcomes are not achieved. There might be lack of the capableand efficient service providers which may pose the problems of inability to provide efficient transportation networks, tools, warehousing, in experienced staff and lack of IT knowledge. There might be loss of control on the activity that is being outsourced and is one of the most common problem as explained in the literature. Sometimes poor transportation and infrastructure and the local regulations are obstacles which are not a problem for the western countries. The loss of skills is one of the most important obstacles in the literature (Kwok Hung Lau, 2006).

Reasons of outsourcing

Companies outsource to reduce the high costs and achieving greater economies of scale. Most of the companies outsource to save overheads of the short term costs. Some of the reasons of IT sourcing were cost effectiveness of specialized computing and system development skills and special functional capabilities. Outsourcing is for all areas of the business and not related to only one activity or function. It could tackle to one function or the whole system process for greater value in the whole organization. Some of them are customer’s response handling, management and procurement (ANDREW KAKABADSE, 2002). It begins by understanding your own business core identity and then finding your unique competitive advantage which will help in understanding your business requirements that what needs to be done from outside. It can help in achieving innovation and improve the quality of the product and increase the revenues. Other do it to find the skills which they can do and to improve the business focus (Corbett, 2004).

Reasons of insourcing

Insourcing is opposite of outsourcing and is done thoroughly in today’s supply chain by doing the initial tasks in the company rather than outsourcing them. One of the reason for insourcing could be to do the work within the company which previously got done from the other companies. It could be because of the dissatisfaction they have faced earlier due to which they decided to get it done through their own employees for better performance. It could also be due to maintain control over the business processes. Insourcing could help in securing the jobs. It helps in reducing the taxes, unemployment, transportation costs, and other costs. It is a time and money consuming process and needs profitability analysis to before the implementation (CHUDZICKA, 2013). Some other reasons might be that the logistics is considered a core competency, in-house services have many capabilities, there are too much complexities to consider outsourcing, better knowing the business, difficulty is integrating the systems, not having costs reductions and political instabilities (Outsourcing vs. Insourcing , 2014)



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