Dq's_for_Week_Four

DQ’s for Week Four DQ Number One After reading this week’s reading assignment this writer was able to improve his knowledge of outsourcing and the possible affects to business organizations that use outsourcing. Outsourcing is defined as moving some part of a firm’s internal activities along with decision responsibilities to outside providers. These responsibilities are established in a legal contract to avoid potential misunderstanding. Not only are business activities transferred but resources are also transferred including employees, facilities and equipment. There can be potential positive and negative effects of outsourcing on the organization. Positive effects include concentration on their core business areas, tax advantages and competitive advantage. Negative effects can include lower quality, loss of control and hidden costs. Outsourcing can also mean current employees lose their jobs to these outside vendors, or may have to accept lower pay or loss of benefits if they decide to accept employment at these organizations. Outsourcing has not affected this writer’s current employment situation. The services provided cannot be readily outsourced and there are no significant advantages for this writer’s employer to outsource these types of services. DQ Number Two Several important differences exist between service and manufacturing capacity planning. The first difference is that services cannot be stored for later use or as inventory. A negative for having inventory is that resources have been used without any revenues being received for these outlays. This inventory can also deprecate or become outdated for the manufacture. A positive to maintaining an inventory allows manufacturing organizations to meet unexpected increases in demand and maintain stronger customer service. Service organizations are more susceptible to changes in demand. The capacity needs to be ready when the customer demands it and these service organizations cannot rely on stored inventory to meet this demand. Another difference is location of these capacities, with services they need to be located close to the customer. Manufacturing organizations can produce the product and then distribute to where the customer are. The third difference is volatility in demand. Manufacturing organizations tend to have service capacity increments of one week while service organizations may need to plan for service capacity increments as short as 30 minutes. An example is a bank teller’s window at lunch time. Again, services cannot be stored and because customers interact directly with the service production system there will be significant differences with process times for these customers. Manufacturing organizations do not have these challenges to their production processes.