Procurement Outsourcing Strategies - Essay Example

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The company produces one product, that is, widgets and assembling this particular product needs the outsourcing of parts to a variety of suppliers. Another option for the…
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Procurement Outsourcing Strategies
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Download file to see previous pages Additionally, the Wonderful Widgets Company gets to act as a management hub that executes the finalized strategies for the product. This reading focuses on the series of strategic initiatives that explain the perceived impact of forming strategic alliances in procurement and outsourcing.
The impending questions regarding the issues with outsourcing this particular case scenario is what risks are involved, and whether the outsourcing strategies should depend on the product characteristics, for example, the clock speed. As the Supply manager, the tasks involved entail the identification and development of an effective procurement strategy that aids in lowering or reducing the monthly operational costs (Rosenfield, 2012).
The final decision pertaining to procurement is also dependent on the business operations involved with the company. Streamlining the business processes is essential in enacting and implementing an appropriate procurement service that works in favor of the business goals in terms of minimizing the operational costs.
The selection of a strategic source for the manufacturing components would aid the company in taking advantage of any classified duty rates or even if the company is eligible to participate in special trade programs. The dynamics of the transit costs ought to be calculated to determine the inventory carrying costs, the freight, duty and brokerage or insurance costs (Rosenfield, 2012).
Subscribing to premium freight services that require paying higher percentages can prove to be expensive to the company’s operational costs. This is common for shipment of premium goods which uses carrier insurance.
Consolidating the goods and components expected by the company from multiple suppliers helps in minimizing transport costs for the business. The variable transit times for goods from different suppliers results in higher payments for the company. Since the company ...Download file to see next pagesRead More
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