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Internal & External Sourcing Strategies Paper

In: Business and Management

Submitted By lmattair
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Running Head: Internal & External Sourcing Strategies

Internal & External Sourcing Strategies Paper

University of Phoenix

March 7, 2011

The decision whether and organization chooses to source internally or outsource depends on the overall need of the organization. Many of these goals reflect achieving high quality, low cost, on-time delivery, and satisfactory cooperation and from suppliers. The two main key factors that drive the decision to source internally or outsource is driven by the supply base structure and in customer to supplier relationships. Outsourcing since has become a more favored approach for most organizations. Studies show that last year companies within the United States spent about $29 billion on outsourcing services or products (Thomas, 2009). It’s obvious that outsourcing has become a huge driver for organizational business strategies. Some advantages in increased sales, higher profits, new knowledge and experience Some advantages of global sourcing include: lower costs, tapping into skills or resources unavailable domestically, developing alternate suppliers and sources to stimulate competition. Some disadvantages include: communicational barriers between the organization and the suppliers. Hidden costs associated with different cultures and time zones, exposure to financial and political risks in countries with emerging economies, a risk of the loss of intellectual property, and increased monitoring costs relative to domestic supply. For manufactured goods, some disadvantages include long lead times, the risk of shutdowns interrupting supply, and the difficulty of monitoring product quality. Bringing together people from different cultures for outsourcing will not create any value. The organization will need to invest time and money into designing and implementing diversity initiatives that will help make use of what…...

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