Operations Management

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Production and Operations Management is concerned with the problems of developing, producing, and delivering goods and services. Researchers focus on how to combine concepts, models, and data to help managers develop better systems and make better decisions concerning operations. Recent research in the area has focused on inventory, international operations, forecasting, information systems, logistics, purchasing contracts, outsourcing, and more. Today’s highly competitive world business environment is forcing management to aggressively pursue ways to achieve efficiencies, improve customer service and save money.

In their frantic search for new ways to streamline company operations, the concept of outsourcing “non-core” business processes and activities is a tempting new way to improve operations and costs. Management has become intrigued with the idea that they should be focusing on managing and controlling those key “core” business processes and activities that their organizations are best at doing and that represent the mainstay of the business instead of trying to dilute precious efforts in some of the business activities that do not represent the essence of the activities of the company.

Outsourcing is hiring someone whose expertise can perform a business function or activity better, more cost effectively and in a more timely manner than can be achieved in-house. The concept of outsourcing is not new. Outsourcing, by the old definition, was very specific, targeted, and often project based. The company might design a product, and then outsource the manufacture of various components, subassemblies, even the finished product.

Outsourcing takes place when an organization transfers the ownership of a business process to a supplier. The key to this definition is the aspect of transfer of control. This definition differentiates outsourcing from business relationships in which the buyer retains control of the process or, in other words, tells the supplier how to do the work. It is the transfer of ownership that defines outsourcing and often makes it such a challenging, painful process.

In outsourcing, the buyer does not instruct the supplier how to perform its task but, instead, focuses on communicating what results it wants to buy; it leaves the process of accomplishing those results to the supplier. Outsourcing involves numerous steps: At first, the agency identifies its requirements and lists down the options that are available to achieve the desired needs. Further on, the agency then establishes requirements for outsourcing and selects appropriate vendors and negotiates the required details.

Next, the agency is outsourcuing its functions. Thus, they have to handle the entire managements of outsourcing in an effective manner and keep track of the vendors. Finally, the agency manages the close of the agreement i. e. payments and other formalities and tries to analyze if the outcome matches to their requirements i. e. what they had asked for is achieved or not according to their specifications.

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