Write a 150 word minimum answer to the following question.
Q. If you had to decide whether to continue making a component part or to begin buying the part from an overseas supplier, what quantitative and qualitative factors would influence your decision?
Write a 50 word minimum peer responses each to the two answers.
A1. If I had the choice of outsourcing a component part or continue manufacturing the product, the first qualitative factor that would influence my decision would be the quality of the final product my company had produced and the final product from an overseas supplier. I feel that if the product had a diminished quality of more than twenty percent, the costs of replacements for malfunctions or replacement parts. But the main factor would be quantitative. If I (or my company) were producing a small part at forty parts per day compared to 400 parts per day with an overseas manufacturing supplier at the same price than that would be another influencing factor in my decision. As all accountants would agree, to be a viable product and/or company, you still need to be profitable. Unfortunately, it does seem like more and more manufacturers are having their products outsourced to companies overseas because not only do they have a lower manufacturing cost, you do not have the overhead costs to factor into the final wholesale price and that is always appealing to consumers.
A2. The factors that would need to be considered when deciding to either continuing making a component or outsourcing it would be manufacturing costs versus product costs as well as enterprise risk management, and reputational risk. First, is cost of buying raw materials, paying your workforce, and maintaining the business less than the cost of purchasing the completed item from an outside source. There are times another company may be able to produce the same item at a much reduced cost than you can because of infrastructure and technology they already have in place. Second you must take into account different aspects of enterprise risk management. Are the other company’s manufacturing practices up to your company’s standards? What happens if weather delays a shipment? What if your company’s information is compromised through the third party company? Lastly, many people do not believing in outsourcing jobs/components. Many people want a product made either by a company or in a country 100% because of loyalty or the reputation of that company. For those people who do not believe in outsourcing, it may do damage to your company when they find out you have outsourced.