Adam Coss
Marion Jensen
IST1100
31 January 2015
Module 3 Essay
So far, this book has talked a lot about outsourcing and how the world has been flattened by this amazing concept. Outsourcing is certainly a very powerful strategy for many businesses, especially the multinational ones. It offers so much more for a price that just can’t be beaten. While outsourcing has helped many companies with some of the more tedious parts of their workflow, such as accounting, bookkeeping, order processing, software engineering, data entry and many other tasks, it may not be the smartest choice for all businesses.
For many businesses, it makes sense to move their entire operation, from start to finish, to another country where they can benefit from cheaper labor and lower cost of employment. These lower cost may be a result of lower taxes or government required benefits. When all of this comes together, it’s possible to lower the cost of the entire operation rather than only a portion. This is referred to as off-shoring. There are some companies that use this method in the US. Nissan motors began building vehicles in Japan and later started making trucks in the US. They built the factory and everything to manage and maintain the facility in Tennessee so that they can sell the trucks to US buyers while saving on shipping costs and gaining entry into a market that could not be done in Japan at that time.
It’s important to understand the difference between the two concepts because they mean very different outcomes for a business. It makes sense for a freelance designer to outsource their accounting or file management to some fast and eager worker in Bangalore, but they would never trust the entire process to be handled by a complete stranger. On the other hand, a shoe company will likely prefer to have the materials, workers, order processing, accounting and many other aspects handled in an area of the world where they can take advantage of cheap labor and much lower material costs.
While many companies focus savings in outsourcing and off-shoring, it is equally important to know how your processes are operating. Wal-Mart is an innovator in new supply chain techniques. I’ve witnessed some of these innovations at other companies, such as Associate Foods. Their warehouse was in the process of transforming the last time I was there. Half of the warehouse was using printed stickers so that the employees could look on the sheet and see what the next item to pull was. Once they put that sticker on the box they move on to the next item. In the other half of the warehouse, there was a voice activated system that would guide you to the next item to pull and notify you of your progress, similarly to the system for Wal-Mart as described in the book. Obviously there are many ways to save some time and money in this complicated process.
You can only improve your business if you know what needs to be improved. Before, if you wanted to know about your competition, you would have to spend thousands of dollars in market research. For smaller businesses, this was certainly out of reach. Now, all you have to do is get on Google and search your market for top competitors. You can view their pricing, services and even get a good idea of they operate by reading online reviews about their business. Google has extremely powerful tools for those that operate online, such as Google AdWords, Analytics, and many other tools. I use some of these myself and the information is priceless. It can tell you when your customer arrives at your site, how they got there, what they clicked on and how long they stayed. This can make the difference between putting ads in the landing page or a different page, or investing in ad space on a site where you are getting good traffic from. In all, these aspects of business are not universal wins for everyone, however, knowing what each of these strategies can do can help you make key decisions on operating more efficiently.