Respuesta :
While internal coordination costs are unique to external sourcing alternatives, they must be contrasted against the internal coordination and overhead costs associatee with internally sourcing a product or service.
External sourcing alternatives or outsourcing is a strategy chosen by a company to reduce its production costs through appointing external parties or subcontractors to do the job for them. A company outsources some of their non-core and less important works to subcontractors.
However despite many benefits from outsourcing, there are many disadvantages as well from this strategy especially in the financial aspects. Those disadvantages are known as the hidden costs of outsourcing. The hidden costs of outsourcing are consisted of:
- Quality costs
- Costs of strategic supplier relationship management
- Internal coordination costs
- Costs related to implementatiton of external sourcing model
- Cost of product/service design and development
- Governmental and political expenses
- Costs related to supply chain risk management
Quality costs are costs associaated to preventative, appraisal, internal failure and external failure. When outsourcing a part of production processes to subcontractors, a company has to ensure that proper mechanisms are placed by those subcontractors. A company has to make sure t be able to detect any quality failures by an external source.
Not all external sourcing relationship are made equal. Outsourcing relationship involving commodity products may not require extensive relationship building and coordination. However the external sourcing of strategic products is the other hand of the spectrum. This kind of relationship require extensive relationship building and coordination activities.
While internal coordination costs are unique to external sourcing alternatives, they must be contrasted against the internal coordination and overhead costs associatee with internally sourcing a product or service. Outsouring might not directly eliminate any internal coordination costs related to the works outsourced.
Supplier search activity, evaluation and contracting, transfer of the physical assets, domestic and internal travel during startup, and training the new sources to ensure of smooth transition and seamless integration incurred when switching sources. These kinds of costs included in costs related to implementation of external sourcing model.
The costs of tightly coupled and integrated product designs required higher levels of coordination and make it unappropriate for external sourcing. A literature finds that the difficulty and cost with which knowledge is shared accross firms are high.
When a company is considering internationally outsourcing alternatives, a company has to clearly understand the costs involved to ensuring compliance with the local goverment laws, regulations, and local business customs. This kind of cost is not limited to legal expenses.
Outsourcing risks include beaching in intellectual property, provider shirking, and opportunistic renegotiation.
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