Lecturte Logistics management - Chapter 15 provides knowledge of outsourcing. At the end of this lecture, students should be able to define outsourcing, understand the advantages and disadvantages of outsourcing, understand the 3PL, 4PL. | Outsourcing At the end of this lecture, students should be able to Define outsourcing Understand the advantages and disadvantages of outsourcing Understand the 3PL, 4PL Learning Outcomes What is Outsourcing? Outsourcing is contracting with another company or person to do a particular function OR Outsourcing is the contracting out of a business process, usually non-core functions (which an organization may have previously performed internally or has a new need for) to an independent organization from which the process is purchased back as a service. Implicit in Definitions The definitions of outsourcing include both domestic and foreign contracting, termed insourcing and offshoring. Other terms have also been developed including: Nearsourcing – the transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country. Crowdsourcing – a process that involves outsourcing tasks to a distributed group of people. Why do businesses outsource? . | Outsourcing At the end of this lecture, students should be able to Define outsourcing Understand the advantages and disadvantages of outsourcing Understand the 3PL, 4PL Learning Outcomes What is Outsourcing? Outsourcing is contracting with another company or person to do a particular function OR Outsourcing is the contracting out of a business process, usually non-core functions (which an organization may have previously performed internally or has a new need for) to an independent organization from which the process is purchased back as a service. Implicit in Definitions The definitions of outsourcing include both domestic and foreign contracting, termed insourcing and offshoring. Other terms have also been developed including: Nearsourcing – the transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country. Crowdsourcing – a process that involves outsourcing tasks to a distributed group of people. Why do businesses outsource? Lack of expert-labour in some portions of the business process. Availability of cheaper labour, whilst not compromising the quality of output. Ability and feasibility to concentrate on the other crucial business process. Advantages of Outsourcing Swiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output Concentrating on core process rather than the supporting ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process. Advantages of Outsourcing Risk-sharing: one of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the
