3.14 global considerations in operations management

What is global sourcing?

the practice of seeking the most cost effective raw materials and other inputs from overseas suppliers

Advantages of global sourcing

reduced costs, new potential markets, greater access to resrouces, increasing capacity of total supply

Disadvantages of global sourcing

difficult to monitor the quality of inputs, ethical considerations, risk of ports shutting down and interupting supply

What is overseas manufacture?

the production of a good in a country that is different to the location of the businesses headquarters

Advantages of overseas manufacture

access to different skills, takes advantage of tax incentives, cost effective

Disadvantages of overseas manufacture

local job loss, damage during delivery, ethical consideration

What is global outsourcing?

the contracting of a specific part of business operartions to an external person or business in another country

Advantages of global outsourcing

improved quality due to expert service, business can focus on core activities, cost effective, increased productivity

Disadvantages of global outsourcing

loss of local jobs, mangemnet has less control