The paper 'Managing Production Outsourcing Risks in China’ s Apparel Industry" is a good example of a management assignment. The article by Kam, Chen and Wilding (2011) employs a case study approach to explore how Chinese apparel retailers functioning in diverse markets control their production outsourcing dangers. The authors also examine why Chinese apparel retailers choose to manage outsourcing dangers. According to the authors, the choice of production outsourcing risk management policies depends on what the apparel retailers consider as the most significant value that their commodities offer to their clients (Kam, Chen & Wilding 2011, p. 428).
To manage the production outsourcing risks, the retailers who considered the quality of a product as a major value driver employed formal contract and selection of manufacturer for process management. Those retailers that considered variety and newness as a driver of value cultivated a committed and powerful linked founded on Guanxi to attain quick access to the market. Kam, Chen and Wilding (2011, p. 439) assert that the option of outsourcing management strategies with respect to Chinese apparel industry depends on what apparel retailers view as their commodities’ value drivers.
Companies that rely on technical superiority to attain product quality and brand image as important value drivers emphasize on process control and manufacturer choice. Other apparel retailers consider variety and newness linked to swift product change-over because value drivers would be more disposed to encourage a powerful and committed business partnership. Kam, Chen and Wilding (2011, p. 428) assert that in the fashion industry, clients’ desires for variety and newness have instigated the continuous shortening of the product life cycle in apparel production. The speed-to-market is considered as a major expectation.
While apparel manufacturers seek to attain speed-to-market via diverse means, production outsourcing has become an extensively popular strategy. Outscoring production offshore to lower cost is a widespread practice in the fashion industry. Outsourcing depicts the upshot of an organization’ s cost economizing conduct (Kam, Chen & Wilding 2011, p. 429). Chan, Pringry and Thatcher (2008,p. 283) assert that lower production costs of outsourcing vendors and the call for a firm to develop an adaptable management structure drive organizations into engaging in outsourcing. Outsourcing decisions rely on the suitability amid a firm’ s capabilities and resources base, and resources accessible externally, besides transaction conditions.
Strategic outsourcing allows firms to take advantage of the capabilities of vendors, center on core competencies, enhance response to fast-shifting customer demands and saving costs. However, Kam, Chen and Wilding (2011) confirm that not all organizations that engage in outsourcing are successful in obtaining the expected benefits (p. 429). Unnoticed risks sealed in outsourcing contracts besides the selection of unsuitable outsourcing strategies instigate low pricing. Kam, Chen and Wilding (2011, p. 429) highlight major causes of outsourcing risks which include a selection of unsuitable vendor, ignoring personnel, custom, language and cultural issues, outsourcing inappropriate activities, ignoring concealed costs, lack of control of the outsourced procedure and failure to establish an exit strategy.
Production outsourcing could trigger loss of clients, complexity in shifting commodities while reacting to market demand, loss of critical skills, quality variability issues and loss of market share. Outsourcing production holds the potential to slow an organization’ s reaction to market shifts given the commonly long lead-moments of clothing production. Offshore outsourcing further lengthens an organization’ s production lead time; weaken its rapid-reaction ability to shifting market condition besides dampening its supply chain agility.
In this regard, Kam, Chen and Wilding (2011, p. 429) advocates for the employment of multiple perspectives to prevent the wide assortment of outsourcing risks.
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