SC0002 - Outsourcing

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(Winter/November 2012)

Master of Business Administration - MBA Semester 3

“Supply Chain Management” Specialization

SC0002 - Outsourcing

(4 credits)

(Book ID: B1543)

ASSIGNMENT- Set 1

Marks 60

Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions.

Q1.a. What are the main barriers of outsourcing?

Ans : a) Barriers of outsourcing :

(1)Time and Effort Choosing and Managing:

Management time will need to be allocated both to choosing the contractor and in ensuring that the obligations entered into both by the contractor and by the outsourcing organization are met. This may take up a significant amount of management time if it is to be truly effective.

(2)Losing Key Skills:

When a service is outsourced for the first time, the provisions of TUPE will apply. TUPE is the Transfer of Undertakings (Protection of Employment)

b. Describe functional process outsourcing with an example.

Ans: Functional Process Outsourcing

A company’s business processes end at its true customers, the people paying the bills. There are, however, many internal processes that exist to support people within the company and are often performed within a single department. Human resources, finance and accounting, travel, and facilities services are examples. When these functional processes are outsourced, along with the supporting technologies and supply

.

Q2. What are the four strategies for offshore outsourcing? Explain them with a diagram.

Ans: Offshore outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured. It can be contrasted with offshoring, in which the functions are performed in a foreign country by a foreign subsidiary. Opponents point out that the practice of sending work overseas by countries with higher

Q3. “Organisations need to consider outsourcing as another management discipline.” Justify.

Ans: Outsourcing is an increasingly common activity and one in which P & SM professionals should lead in their organisations. CIPS believes that P & SM professionals should be encouraged to suggest outsourcing activity by identifying those services or make or buy decisions for which they have an understanding of the costs involved which could be considered for outsourcing. Outsourcing services to organisations

Q4. What is value chain? Bring out the differences between the value chain in a Product Company and Service Company using appropriate figures.

Ans: Value Chain :

Value chain is a high-level model of how businesses receive raw materials as input, add value to the raw  materials through various processes, and sell finished products to customers. The value chain  categorizes the generic value-adding activities of an organization.

A value chain is the disaggregating of a firm into its strategically relevant activities for the purpose of understanding the behavior of costs as

Q5.a. How does an organisation see an outsourcing opportunity in process terms?

Ans: Outsourcing can be defined as “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources.: Outsourcing is a strategy by which an organization contracts out major functions to specialized and efficient service providers, who become valued business partners. Sometimes outsourcing involves the transfer of employees from the company to the outsourcing company.

Organisations see an outsourcing

b. What are the responsibilities of an outsourcing team?

Answer : Organizations have a better chance of success when senior executives involve themselves and take an active interest. The CEO should:

• Put the best, most capable managers in charge of the outsourcing evaluation and management of the outsourcing relationship. Outsourcing decision-making and management are substantial responsibilities with important consequences in terms of the information that supports an organization’s functioning. Outsourcing requires good people.
•  
• Q6. What is the significance of creating a scorecard when you are planning to outsource a process? And, what does the scorecard include.

Ans:  Balanced scorecard methodology is an analysis technique designed to translate an organization's mission statement and overall business strategy into specific, quantifiable goals and to monitor the organization's performance in terms of achieving these goals.

Developed by Robert Kaplan and David Norton in

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