Benefits of external partners speed outside partners

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Benefits of External Partners Speed-Outside partners will have facility, employees, and machines already in place. Plus, they likely have suppliers and logistics firms already under contract. Your company would have to go through months if not years of planning to open up a new facility Expertise- Not only is their firm up and operating, their firm has been in business for years. They likely know what they are doing. They have encountered problems, and have hopefully fixed them. Your company would have many mistakes ahead of them before they could achieve a contractor’s level of competency.
Resource Utilization- Their use of people, materials, and machines will likely be more efficient than the output of what your company would be able to achieve in the first few months/years. In addition, if they manufacture for multiple companies, they will likely have more buying power with suppliers. Focus on Core Competencies- Every Company has different strengths. Sometimes utilizing outside partners allows your company to focus on its strengths and it allows the contractor to do what it does best, manufacture products. Risks of External Partners Quality control- how concerned are they about the general quality level of products that will ultimately carry your name, not theirs? Intellectual property- will this company protect the secrets that make your products better/unique? Business practices- is your business partner a legal and ethical entity? Ethics? Loss of strategic flexibility- outsourcing causes loss of flexibility in some cases. Offshoring - Strategy where a company moves manufacturing out of its home country to another country Outsourcing ( and both) - When a company contracts an outside firm to perform services, operations, or business processes that could be or were previously performed in-house. Contract manufacturers - A company that produces goods on behalf of another organization. Example: Apple designs numerous digital devices but they outsource manufacturing to companies like Fox-conn and Pegatron. Near-Sourcing - While this term does not have a consistent definition in the world of supply chain management, it often refers to a type of offshoring or outsourcing where the location of the manufacturing facility is relatively close to the location of the consumer. Typically, it refers to a shift in strategy, where a company used to manufacture goods very far away Manufacturing compliance, Manufacturing audits, Currency exchange considerations, Infrastructure, Customs and Regulations C-TPAT Customs-Trade Partnership Against Terrorism A voluntary program developed by US customs and Border Protection for companies importing goods into the US. The program requires member organizations to report a significant level of detail related to supply chain partners and actions for each imported shipment. In exchange for providing this information, member companies are allowed opportunities for speedier and more hassle-free custom clearance.

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