Outsourcing Kansas State University外包堪萨斯州立大学.pptVIP

Outsourcing An “easy way” to increase profits Nike, Cisco, Apple outsource most of their manufacturing Each could focus on research, marketing Each has gotten into trouble 2001 – Nike reported unexpected profit shortfalls due to inventory problems 2000 – Cisco had to write down billions in obsolete inventory 1999 – Apple was unable to meet customer demand for new products Outsourcing Benefits and Risks Benefits Economies of scale reduce manufacturing costs Risk pooling – demand uncertainties are transferred Reduced capital investment Focus on core competencies Increased flexibility Risks Loss of competitive knowledge Conflicting objectives Flexibility vs. long-term, stable commitments, etc. Consider the IBM PC example. A Framework for Outsourcing Reasons for outsourcing Dependency on capacity Dependency on knowledge Product architecture Integral products – components are tightly related Designed as a system Not off-the-shelf components Evaluated based on system performance Modular products –independent components A Framework for Outsourcing (Fine Whitney) The Move to B2B Commerce B2B is Huge... FreeMarkets Online FreeMarkets is an online market making firm that enabled industrial buyers to link up with their potential suppliers in a live electronic bidding The end result of such interaction among a network of suppliers was procurement cost savings of about 15% for the buyers The company was founded in 1995 and was on the verge of breaking even in 1998 It was expecting to receive commissions and fees of nearly $6 million for arranging procurement of ~$200 million worth of industrial components and parts The company went public in 12/99... Where is FreeMarkets today? For the three months ended in 3/31/01 Revenue totaled $33M Net loss totaled $43.7M For the three months ended in 12/31/01 Revenue totaled $44.8M Net loss totaled $2.8M Highly Fragmented Most product categories are highly fragmented, with numerous suppliers each offering different level of qualit