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OUTSOURCING, HOW TO EVALUATE?
Mostly a direct quote from the book:
Many Americans believe from their newspapers that outsourcing is
always bad. That is not always true. For example, one could
outsource to another company within their own country. And if so,
the harm is where? And the answer is that there is no harm. Perhaps
if one outsources the right items then the result is that the most
efficient company then always works on the correct items and perhaps
we all win.
Summary of more logic in the
book:
The real problem, perhaps, is that some people
outsource the wrong things, or to the wrong place, or outsource too
much, or in fact do not even do a valid cost comparison. We should
never outsource the skills that make our business the great business
that it is, only the added "side" items that simply must also be
done. As for doing a proper financial study, I have been two places,
one medium size company, and one huge corporation, and still have
not ever seen a valid study. Often someone high up just decides to
outsource since labor costs will be lower. Perhaps. But also
inventory costs may be higher if the place is not very nearby, and
transportation costs for engineers or business people may be much
higher, and you might lose speed to market or speed to change or
speed to fix issues. There is more to consider than labor costs. One
thing to consider.. is that I know of at least one company that went
out of business after doing much outsourcing. Was that the only
reason? Not likely. But it seems clear that it did not help.
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Book: Strategies I Learned Becoming A VP
During my career, back when Motorola was a huge
thriving company with I heard some 150,000 world wide
employees, I went there from perhaps being the lowest paid
engineer on staff to becoming a Vice President. And that was
not an honorary title only, but a Vice President in charge
of Manufacturing or Engineering of both for a large division
with perhaps yearly a billion US dollars in sales. How did I
do that? Well, I realized I was not born with this
knowledge. I learned it from many people along the way, and
tried to decide what information I was being told made sense
and what information did not make sense. And I learned from
some people.. who I thought were great in business. And so
what is the point of this book? My goal is simply to pass on
business information to others as best as I could, in order
to help others who may come after me. Yes, times change, and
some may have to modify the strategies here as the world
continues to change. But logic does not change. And you
might just find this book a good help at a reasonable price. |
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