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21 Cards in this Set
- Front
- Back
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Outline THREE possible reasons for the failure of an outsourcing contract. |
- Failing to specify in sufficient and measurable detail the nature and scope of the activity - Poor terms and conditions being negotiated by the buyer - Assumptions about cost reductions not being delivered by the supplier - Relationship breakdown - Inflexibility |
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Discuss FIVE possible actions that could be taken to ensure success in out sourcing contracts |
- Ensure that a proper and full business case is made - Prepare a detailed specification - Conduct a thorough risk assessment of the process - Cost the present system carefully - Calculate the payback period - Establish a contract management system
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Outline FOUR factors that the company should consider when deciding whether to buy in the shoes or continue to manufacture them |
- - market demand - competitors’ prices - the availability of competent external suppliers - quality issues - in-house capacity and competencies - skills at managing commercial relationships - possible redundancies
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Explain the role of the procurement function in the procurement process if the company decides to outsource the supply of shoes |
- Developing specifications - Identify potential suppliers - Negotiations - Supplier management
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Define the term ‘outsourcing’ |
Delegation of major non-core activities under a contract to a specialist external provider, potentially for the long term. |
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Describe THREE benefits for the university of outsourcing these activities |
- cost savings - cost certainty - better quality of service - increased flexibility and responsiveness
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Describe two disadvantages for the university of outsourcing these activities
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- Loss of control - Employement issues e.g. TUPE |
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Discuss the stages of the procurement process when an organisation outsources an activity. Use examples to illustrate your discussion |
1. Business case 2. Define requirement 3. Appriase suppliers 4. Invite to tender 5. Evaluate tenders 6. Negotiations 7. Award contract 8. Contract management |
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Describe FIVE risks for an organisation of outsourcing a strategic function, such as Information Technology management |
1. More expensive 2. Performance levels drop 3. Cost to monitor contract 4. Loss of in-house knowledge 5. Loss of control of performance levels 6. Loss of control of DP and IP 7. TUPE 8. Potential failure |
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Explain FIVE factors that a manufacturing company will take into account when deciding whether to make a component itself or whether to buy it from a supplier
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1. whether the component is strategically important to the business 2. how the costs of producing in-house stack up against buying from a supplier 3.the availability of competencies in-house and in the outside marketplace 4. the available capacity in-house and in the outside marketplace 5. the risks involved in devolving production activities to the external supply chain, such as risks to confidential information and to intellectual property 6. and the effects on the workforce, such as the possibility of redundancies
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What are the three levels of planning? |
1. strategic 2. tactical 3. operational |
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What are the factors to support making/doing? |
1. use idle resources 2. reduce lead time 3. direct control 4. less risk 5. stable workforce 6. costs known |
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What are the factors supporting buying in? |
1. not economic to produce small qtys 2. avoid cost of machinery and labour 3. reduce inventory costs 4. share risk 5. supplier is expert 6. stable workforce |
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What are the reasons for the growth of outsourcing? |
1. Focus on core activities only 2. globalisation 3. public sector outsourcing 4. drivers for outsourcing: quality, cost, business, relationship, HR |
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List the costs involved in outsourcing |
1. planning and sourcing 2. contractual 3. failure 4. performance 5. hidden |
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Define 'off-shoring' |
- Re-location of the business to a lower-cost location - A form of outsourcing |
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What is a threshold compentency? |
- basic capabiltiies needed to support organisation e.g. IT |
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What is a core comptency? |
- distinctive, value adding, difficult to immitate |
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What are the key elements of contract management? |
1. development 2. communication 3. administration 4. managing performance 5. relationship management 6. renewal or termination |
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Contract provision for outsourcing? |
1. confidentiality 2. IP 3. Transfer of assets 4. Employment terms (TUPE) 5. Indemnities & Insurances 6. subcontractors 7. LD 8. Dispute resolution 9. Jurisdiction 10. price adjustments |
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What contract provsions could be used for exit plans? |
1. early exit: same as a break clause 2. emergency step in: outsourcer re-assume temporary operations 3. transition: smooth transition from current to new supplier
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