The term Outsourcing can be defined as the strategy for cost-effectiveness when implemented properly into a business. It can be well explained by taking the example of a giant coffee company “Starbucks” in the following discussions. This concept is sometimes very important to consider as it provides a platform for affordability in the business by outsourcing of goods rather than producing internally. It may also include shift in the operations area that can provide growth in the economy of the business. The company Starbucks had massively used outsourcing over the years to expand the supply chain which also led to significant cost inflation.
The decision logic includes the analysis of relevant costs and benefits related to the outsourcing of materials, resources or products of a business organization. The decision logic are developed and explained on the basis of two factors like make & buy of a product or service by any company. The factors of deflation in costs must be excluded while decision analysis for outsourcing of a product/service by the company (Acharyya and Brady, 2014).
For instance in this case of Starbucks, the decisions for outsourcing should be made on the basis of some questions like should I outsource my customer feedback call centre? Should I outsource transport and logistics or hire in-house facilities?
Thus the proper decision making can increase the cost-effectiveness and efficiency in the business process of organization (Chen and Chen, 2014).
Outsourcing can help to introduce fresh business policies or procedures as well as it can free up time for innovation or other important tasks related to the business. However, making wrong decisions can lead to put the business into a competitive disadvantage which will lead to control loss over proper information, or product/services that does not meet the quality standards of the organization.
So in context to Scordis et al. (2014), as the Operations Manager of the giant coffee industry “Starbucks” I would like to highlight upon the detailed logic map based upon the decision logic of outsourcing. The outsourcing decision matrix is used to clearly identify the process, product/service of function which can be kept in-house and which can be safely outsourced (Dionne, 2013).
The Outsourcing decision matrix can be developed on the basis of two factors:
1. How important is the task to our business? As strategically tasks are important resources for competitive advantage.
2. What is the impact of the task on the performance of business operations?
The Outsourcing Decision Matrix
The modules of the matrix are as follows:
The logic map for the company can be demonstrated as:
According to Roberts et al. (2013), the idea of strategic analysis has been presented in the business in the year 1960s, with a point of upgrading the business execution and it has been likewise raised in the business setting as a goal of guaranteeing the long haul supportability for an association.
The five performance objectives used to analyze the factors that influence the decisions to outsource or remain in-house in this context is explained below:
In order to analyze the operations performance objectives, it can be stated that cost is one of essential aspects, which is usually helping a company to ensure its current position as well as future prospects in an effective manner. Thus, most of the global companies usually emphasize towards manufacturing cost of its products as well as services for enhancing the ability of the company in the operating marketplace. In this context, more specifically it can be argued that Starbucks has highly emphasized towards its manufacturing/ production cost for enhancing its business competencies in the operating marketplace (Gjerald and Lyngstad, 2015).
This plays an important role so as to attract customers at the same time it also may enhance its market share within the operating marketplace. Moreover, better quality products may enhance brand recognition for a company. In this regard, more specifically it can be stated that during the manufacturing of coffee products or services, Starbucks has highly emphasized towards the specification of the products. At the same time, Starbucks has highly concentrated towards its quality related aspects and aiming to maintain the standards. Thus, it can be stated that quality assurance related decisions help a company to gain better competitive advantage in the operating marketplace (Kazmer, 2014).
The growth of the company can be ensured by concentrating on the operation process which may enhance operational efficiency of the company. In this regard, more specifically it can be stated that Starbucks always has provided its highest attention towards the speed of the business process along with its operations, for making better strategic decisions. At the same time, quick response of the company may reduce challenges for the organization by enhancing customer demands and it also has led the company towards better success in future.
This is an essential aspect as it helps the organization to fulfill the needs and stand up to the expectations of the customers by enhancing the ability to deliver products as well as services amid the customers. In this context, it can be mentioned that Starbucks has enhanced its dependability on the customers by extending its overall range of product and services (Lacity and Willcocks, 2014).
In addition to the above mentioned aspects this one is also considered as one of the essential aspects for making business decisions as it can enhance the quality of operations. In this context, more accurately, it can be argued that Starbucks has always emphasized towards its flexibility related aspects with an intention of extending its business performance in around the globe.
Thus, by analyzing the operations performance objectives, it can be evidently stated that through considering these factors BP may also identify appropriate strategic decisions for its outsourced as well as kept in-house products.
The management of uncertainty lies on recognizing, measuring, and examining the factors that can influence the outcomes. This will help to identify potential risks and their impact. The types of risks involved in the decision making process include:
Risk Control is focused at those dangers that were not considered as worthy. E.g. theirs quality is over the agreeableness level. Restraint comprises in proposition, tolerating and acknowledgment of measures, that can take out those dangers or their worth is influenced somehow. Choice is the last aftereffect of the danger control stage and is typically the yield of considering a few arrangement variations. As, the decision makers the risks level, size and nature must be predetermined so that proper decisions can be taken to enhance the business process of the company (Office, 2015). The risks are evaluated and can be controlled according to the principles of 4T as discussed below:
Decision making is the intellectual procedure prompting the determination of a course of activity among varieties. There are loads of risks in each stage. The reason for danger administration is to guarantee levels of danger and instability are appropriately overseen. All together to oversee dangers in the decision making is important to comprehend what is. The essential help for issue of danger in choice making procedure is utilizing the choice techniques for each stage. Thus, as the operations manager for the Starbucks coffee company the decision making should be done on the basis of risks and strategic analysis to continue the business process flow of the company.
Acharyya, M. and Brady, C. (2014). Designing an Enterprise Risk Management Curriculum for Business Studies: Insights From a Pilot Program. Risk Management and Insurance Review, 17(1), pp.113-136.
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Dionne, G. (2013). Risk Management: History, Definition, and Critique. Risk Management and Insurance Review, 16(2), pp.147-166.
Duckett, D. and Busby, J. (2013). Risk amplification as social attribution. Risk Management, 15(2), pp.132-153.
Elahi, E., Sheikhzadeh, M. and Lamba, N. (2014). An Integrated Outsourcing Framework: Analyzing Boeing's Outsourcing Program for Dreamliner (B787). Know. Process Mgmt., 21(1), pp.13-28.
Gjerald, O. and Lyngstad, H. (2015). Service risk perceptions and risk management strategies in business-to-business tourism partnerships. Tourism Management Perspectives, 13, pp.7-17.
Kazmer, D. (2014). Manufacturing outsourcing, onshoring, and global equilibrium. Business Horizons, 57(4), pp.463-472.
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Lacity, M. and Willcocks, L. (2014). Business process outsourcing and dynamic innovation. Strat Outs, 7(1), pp.66-92.
Lair, C. (2012). Outsourcing and the Contracting of Responsibility*. Sociological Inquiry, 82(4), pp.557-577.
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Scordis, N., Suzawa, Y., Zwick, A. and Ruckner, L. (2014). Principles for Sustainable Insurance: Risk Management and Value. Risk Management and Insurance Review, 17(2), pp.265-276.
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