Factors Influencing Decisions to Outsource

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  • Factors Influencing decisions to outsource
    • Available capacity
      • Spare capacity - produce in-house
    • Expertise
      • Often better expertise when outsourcing
    • Quality considerations
      • Off-shoring:  used to describe outsource/subcontract when the activity being transferred takes place in a different country to the contracting company
    • Nature of demand
      • Often used when sudden climb in demand
    • Cost - particularly low cost
    • Level of risk
      • Loss of control over operations/know-how
        • Boeing outsourced 70% of Dreamliner and experienced quality problems
    • Impact of profit
      • Outsourcing may reduce profitability

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