1) ( TRA4944) Selecting the right supplier should include more aspects than a “good quoted price.” Identify at least two other aspects commonly used in selecting a supplier. Explain why each aspect is important and significant in selecting the right supplier.

2.From your experience and/or by conducting research select an international organization of your choice and explain their outsourcing strategies. Be sure to explain their relationship and how their logistical strategies are linked to their overall goals and purchasing strategies. (TRA 3132)

3.Organizational leaders are tasked with deciding if outsourcing or offshoring is beneficial for the company. Discuss the differences and similarities of outsourcing versus offshoring. Using the Internet, identify a company that participates in either offshoring or outsourcing and explain the advantages and disadvantages of their decision. ( TRA3270)

 

Discussions

1. Question 1

Good suppliers often ensure the success of a project. That is why there are aspects that one must consider in selecting a supplier. Quality is one of these aspects. Quality and cost are closely correlated such that if a product is more expensive, it has better quality. However, irrespective of the price, there is an agreed level of quality that one may ask a supplier to meet. The quality not only refers to the product itself but also the packaging and labeling (Gee, 2021). Quality products need to be packaged adequately and labeled correctly. Before signing a contract with the supplier, it is wise to ensure that they can meet these demands since it would be a challenge to market high-end products if the supplier is supplying low-quality products.

The supplier's reliability and previous experience are other aspects to consider. It is worth remembering that signing a contract with a supplier is like entering a long-term relationship with them. One should not be afraid of asking about the previous work experience of the supplying company. Learning about the supplier’s past experiences in the field will help to understand the supplier’s success, good habits, bad habits, and weaknesses. If one has to choose between two suppliers, references can help in the decision-making process. It should be noted that the chosen supplier will reflect upon your business. This means that if the supplier is late on delivering raw materials, the clients of the business will blame you for not delivering on time.

Location is another factor that a business needs to consider before choosing a supplier. If it is a small business, locating a nearby supplier will be quite helpful. For a business that wants to expand internationally, locating a supplier that easily manages to move over long distances is important. This will ensure that the business receives deliveries on time.

2. Question 2

Outsourcing is a strategy used by companies to assign tasks to an external contractor. An example of an international organization that uses the outsourcing strategy is Adidas. Adidas offers apparel, footwear, and other accessories. The sourcing function increases the efficiency of the Adidas supply chain and ensures the highest standards in delivery performance and the quality of products for Adidas clients (Kothari, 2013). The Adidas Company has outsourced its logistics operations which have consequently reduced its operational costs. In 1996, Adidas decided to outsource distribution services to the UPS global logistics outsourcing company in the United States. In 1997, it decided to outsource the distribution of sports shoes with Caliber Logistics Company.

Today, Adidas outsources almost 100 percent of its production. The company works with over 300 independent factories globally that manufacture its products in over 25 countries. Some of these countries include China, Indonesia, Vietnam, Thailand, and India. The supply chain of Adidas is multilayered and global with multiple global business partners. The company’s suppliers have excellent experience in the high volume production of apparel and saving costs in production. The advantages of outsourcing with these companies are that it improves logistics service quality, increases savings in cost, and increases the speed of delivery of the company’s products.

Adidas has enforced strict inspection procedures in its production units and across its suppliers to ensure high-quality products that consumers expect. The global operation of Adidas manages the development of products, product commercialization, and distribution. Moreover, it supervises the sourcing for Reebok and Adidas. Adidas Group subsidiaries also source from local suppliers which are not in the realm of their global operations. The direct sourcing model is used with its core suppliers who produce the company’s predominant share of approximately 75 percent of the total sourcing volume.

3. Question 3

Outsourcing is defined as the process in which a business or organization contracts some of its operations to a third party while offshoring refers to the process in which an organization sends in-house jobs overseas intending to reduce costs (Diffen, 2015). The criticism of offshoring is that it transfers job opportunities to other countries and faces other related risks such as poor communication and language differences. On the other hand, the risk of outsourcing is the increased reliance on the assistance of third parties, misaligned client and vendor interests, and lack of in-house knowledge of some critical business procedures. However, they both benefit a company in one way or another. For instance, offshoring provides better availability of skilled personnel, lowers production costs, and increases the speed of production. On the other hand, outsourcing provides labor flexibility, reduces costs of production, and gives the company skilled personnel to work on their projects.

A good example of a company that used outsourcing is Nike. Nike outsources to have a cost advantage in production. Outsourcing also allows Nike to ramp up and down as quickly as possible. The company also outsources to ensure that the quality of its products is higher. This happens when they don’t have in-house expertise for the production of certain accessories. Outsourcing also helps the company to focus on its core competency. A core activity is an activity that provides a company with a competitive advantage. This means that Nike can focus on what it does best and leave the rest to outsourced companies.

Offshoring has benefited Nike in various ways. It has lowered the cost of production and increased the productivity of the company. As a result, the company has made significant profits globally. Outsourcing has also provided the company with access to specialized skills that were not found in-house. The disadvantages of outsourcing, on the other hand, include disconnected control structures since Nike has no power to oversee the production of outsourced companies. Political unrest has also affected the production process, especially in China. Economic policies such as sanctions have also harmed production. This is seen in China where exports were sanctioned by the US due to political reasons.