It is termed as a complex connection of businesses where there is transfer of products from one to another. An organization with a strong supply chain network optimization will be able to deal with changes in demand, price pressures, and also increase in the number of customers. One with a weaker system will have to upgrade to a newer efficient system or be forced to face the penalties. A company may have any of the following strategies outsourcing, off-shore plants, and also manufacturing of products at its mother country.
Companies that decide to outsource shift costs to the contractor. They will advertise tenders and finally award them to those who qualify. The contractor will take the risk of producing and transporting the goods to the point where they will be utilized. The products will be examined upon delivery and if they are of required quality can be accepted.
The compliance and performance of the contractor is important. He should observe time while delivering the goods since the company has many customers to serve and who need not be late. If they are not served on time, they may get fed up and search for another company that offers the same products. The goods should be effective and efficient since they are paid for and to ensure the name of the firm is not ruined.
Allowing your company to expand to overseas countries is also important. These enables the organization to build up a larger market and create a good name for itself. It will enhance development by employing the citizens of that particular country thus higher standards of living. It will also increase the revenue since its paying taxes. Due to its large operations, it may get tax incentives and holidays that will reduce its expenses.
Apart from the benefits, the company should also consider its risks. Off-shoring operations does not guarantee uniformity of products in the new country and that of origin of the firm. This is mainly affected by culture and language. The beliefs of one group are different with that of another. For instance, one may believe in hard work and living in honesty while another may not. In addition to that, if there is use of different languages people may not understand one another; hence, confusion.
Products produced at the premise of a company do not incur transportation costs. They may be used within the building and if they are to be shifted the costs would be low. These make the prices of such products relatively cheaper and of good quality, since the employees understand the culture of a company. This ensures uniformity of products; hence, a good reputation.
Despite the assurance in quality, this policy may prove relatively expensive. This is because they have to locate the raw materials and transport them to the factory. They also have to train workers on how to operate machines bought. The machines are expensive depending on use and size and may not be affordable to the organization; hence, forcing them to employ other means of obtaining the products.
Moreover, companies should not only consider cost and making profits, but also the impact of their products on people. Producing cheap products that are harmful shows lack of ethics and good morality. This also ruins their good reputation and customers will lack faith in them.
Companies that decide to outsource shift costs to the contractor. They will advertise tenders and finally award them to those who qualify. The contractor will take the risk of producing and transporting the goods to the point where they will be utilized. The products will be examined upon delivery and if they are of required quality can be accepted.
The compliance and performance of the contractor is important. He should observe time while delivering the goods since the company has many customers to serve and who need not be late. If they are not served on time, they may get fed up and search for another company that offers the same products. The goods should be effective and efficient since they are paid for and to ensure the name of the firm is not ruined.
Allowing your company to expand to overseas countries is also important. These enables the organization to build up a larger market and create a good name for itself. It will enhance development by employing the citizens of that particular country thus higher standards of living. It will also increase the revenue since its paying taxes. Due to its large operations, it may get tax incentives and holidays that will reduce its expenses.
Apart from the benefits, the company should also consider its risks. Off-shoring operations does not guarantee uniformity of products in the new country and that of origin of the firm. This is mainly affected by culture and language. The beliefs of one group are different with that of another. For instance, one may believe in hard work and living in honesty while another may not. In addition to that, if there is use of different languages people may not understand one another; hence, confusion.
Products produced at the premise of a company do not incur transportation costs. They may be used within the building and if they are to be shifted the costs would be low. These make the prices of such products relatively cheaper and of good quality, since the employees understand the culture of a company. This ensures uniformity of products; hence, a good reputation.
Despite the assurance in quality, this policy may prove relatively expensive. This is because they have to locate the raw materials and transport them to the factory. They also have to train workers on how to operate machines bought. The machines are expensive depending on use and size and may not be affordable to the organization; hence, forcing them to employ other means of obtaining the products.
Moreover, companies should not only consider cost and making profits, but also the impact of their products on people. Producing cheap products that are harmful shows lack of ethics and good morality. This also ruins their good reputation and customers will lack faith in them.
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