1. Why is it undesirable for the United States to evolve into a service economy?
It is undesirable for the United States to evolve into a service economy because several problems arise if jobs shift from manufacturing to service. One is that service job pay less. Many service jobs are in minimum wage, while hourly wages from manufacturing jobs have historically exceeded the minimum wage by a substantial margin. As a result the standard living will necessarily decline. Furthermore, manufacturing allows the firm to capture payoff for the development of new technology. If this payoff is lost, so is the incentive to invest in research. The decline of manufacturing domestically has led to a shift in jobs from the manufacturing sector to the
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It is our continual focus on short-term performance and the incentive system we have built up around this objective that led to these crises.
4.What are the advantages and disadvantages of producing new products in existing facilities?
Here are some advantages of producing existing facilities:
* Financial benefits – Clean up your balance sheet by eliminating assets, and have a more stable cash flow * Strategic optimization – Think about your company's core mission and whether it is relevant to continue certain operations * Better management of the outsourced activity – In theory, you can choose a supplier that is a leader in the field * Market discipline – You can align your costs with those of suppliers in the field * Technology – In theory, you gain access to state-of-the-art technologies * Flexibility – The resources no longer used in one area can be redirected to the company's core operations
Here are some disadvantages of producing new products in existing facilities: * Loss of expertise – You lose know-how and skills that may prove critical to your long-term competitiveness. Information from suppliers helps in new product development. * Dependence on the supplier – If you resume carrying out the outsourced activity yourself, it can take years to reach the level of performance you used to enjoy. But if the supplier’s service deteriorates, or if their price rises,
After analyzing all these risks and criteria Id like to present some points to demonstrate why we should go for outsourcing:
If the company we outsource with has some sort of issue with its equipment or is running behind schedule it will delay our orders and reflect poorly upon our company. If we choose not to do anything we will continue running at inefficient levels costing us more and more money as time goes on.
Therefore, manufacturers face a trade-off between gain from the efficient technology and loss from paying the information rent. When a firm decides on in-house production instead of outsourcing, although a manufacturer can obtain the entire profit, it loses the gain from the cost efficiency of outsourcing. When outsourcing is selected, although a manufacturer can acquire the gain from cost efficiency, it is required to share the gain with the outsourcer.
3. How can supply chain design and integration help John Wolf reduce investment and space requirements while maintaining adequate service levels?
List and describe at least three factors that a firm should consider when making an outsourcing decision.
1. What changes are occurring in our workforce today and are likely to continue into the future?
A vendor’s main competency is managing computer systems. Through their skills, leverage, and economies of scale, they could provide a level of efficiency that could not be achieved at the outsourcer.
The new service economy has positive and negative aspects. The United States labor was once based on agriculture, then manufacturing and has now turned into an economy based on services (Hodson & Sullivan, 2008). Over the years, Americans have gained more capital and with that capital services such as education, health and entertainment have increased. (Worldbank, n.d.) Because service jobs are not based on the use of machines like manufacturing, jobs are continuing to grow in the
Outsourcing is a method used by many corporations in which their products are manufactured in foreign countries often for cheaper labor.This method method of productions has it’s pros and cons.
Outsourcing is when a company purchases products or services from an outside supplier rather than performing the same work within its own facilities, in order to cut costs. In other words, outsourcing is an organization's contractual relationship with a specialized outside service provider for work traditionally done internally by that organization. The decision to outsource is a major strategic one for most companies because it involves weighing the potential cost saving against the consequences of a loss in control over the product or service. Some common examples of outsourcing include manufacturing of components, computer programming services, tax compliance and other accounting functions, as well as payroll and other
On-the-other-hand, today’s Service Industry offers an ever-growing assortment, for instance: a dentist cleaning teeth; the busboy clearing the dishes; private school teachers; cable television linemen; the court stenographer recording your case; the ever-popular dating web sites; the doctor taking out your appendix; the water taxi in the marina and so on. In our free economy, the sale of products creates profits where services create wealth.
Outsourcing would allow the OSI to focus only on its core business and would be more cost effective for it to reduce capital infrastructure costs. Also improving employee satisfaction with higher value addition jobs and making the best use of competitive resources available worldwide. Using an outsourced company (TIS) would give it the same standard hardware and software platform. And should be high speed and have a lower cost of Telecommunications.
In terms of business, outsourcing can be defined as the process of assigning company’s business processes to external agencies in order to develop the firm’s performance and to avoid business’s high expenses. These expenses may include energy costs, production and labour costs, high taxes and excessive government regulation. From strategic management point of view, outsourcing is used to reduce the operational costs so that the organisation can focus more on the core business and gain competitive advantage. The outsourcing principle was fundamentally applied by PRCM in order to fund the mine design and operation processes. This sort of strategy had large impacts on the company’s performance hence, the next paragraphs will highlight some of these influences.
As I seek to enter the workforce/company, one of the first things that I wish to remember is the importance the company has placed on their strategic planning and goals. How decisions made by this team will directly affect the operations, finance, accounting, purchasing and administrative departments. The things that help to make any organization successful, are the value the organization places on their strategic, and operational goals. Therefore, before taking a position with a company I hope to learn as much as I can about the various functions of the company, and how each department works with the next in order to achieve these goals. Thus, I hope to use the knowledge I have gained in this class in operations management to access the company’s operational strategies. This should be reflective in their mission and vision statements as well as their financial reports. I would also look for the value they place on ethics, corporate responsibility and giving back to the community. I feel a company’s success will be directly tied to how effective they are in meeting the daily challenges of processes/production/service, operations, and sales. The value placed on these specific areas will be evident by their success and reflective in both their short and long term goals, in their financial statements.
Outsourcing should only be implemented when a company’s core competitive advantages are not affected and then when