Global considerations in operations management

3 Global Considerations in Operations

- Global Sourcing of Inputs
- Outsourcing
- Overseas Manufacturing

Global Sourcing of Inputs

Purchasing raw materials and capital in an overseas country, to then be shipped to the businesses country and assembled

Why do businesses Import inputs

- Exploit cheap labour

- High quality labour

- Cheaper raw material

- Inputs not being avaliable locally

Strengths of Globally sourcing inputs

- Teaches business how to conduct business in potential markets
- Accessing skills or resources unavailable locally
- Reduce costs

Weaknesses of Globally sourcing inputs

- Hidden costs associated with different cultures and timezones
- Long delivery times
- Risk of global issues causing supply-chain disruptions

Overseas Manufacturing

A good being produced in a country that is diffrent from the location of the businesses head office

Why do businesses use overseas manufacturing

- Reduce labour and resource cost
- Be closer to major markets
- Have more specialised labour make outputs

Strengths of Overseas Manufacturing

- Lower labour costs
- Allows head business to focus on research, development and design
- Products can be manufactured by specialist producers

Weaknesses of Overseas Manufacturing

- Hidden costs
- Extra transport can worsen the environment
- Local job losses and worse CSR

Types of processes outsourced

- Marketing
- Customer service
- Software development

Strengths of Outsourcing

- Improved quality due to access to high quality and expert knowledge
- Business is able to focus on core activities
- Potentially cheaper labour

Weaknesses of Outsourcing

- Management has less overall control
- Loss of local jobs worsening CSR
- Potential communication issues