The paper "Supply Chain Principles" is a decent example of a Business case study. The study aims at investigating how retailers in China manage their outsourcing risks despite peculiar product requirements and market demand. Also, the study seeks to determine how CL China and TY Apparels develop specific strategies to counter these risks, and if the strategies developed are linked to value protection. The last study motivator was to investigate how the Chinese method of relationship management, the Guanxi, plays a role in these strategies. The main argument put forward concerns the effects of outsourcing.
The study suggests that companies outsource to countries that have lower production costs than the mother country (Leavy 2004, p. 20). The company is, therefore, able to save on costs, ensure product quality by concentrating on the production efficiency of the hosting company, reduce the length of time it takes to respond to customer demand by ensuring fast and reliable supply to meet emerging demands and is also able to focus on its core competencies, the latter being the main purpose for the establishment of the company (Kersten & Hasin 2010, p. 144) However, not all companies that engage in outsourcing enjoy such benefits.
62 percent of the companies were contented with the performance of their vendors for information and technology programs outsourced (Krell 2006, p. 20). According to Mattila et al. (2002, p. 344), out of the products sold at marked down prices in apparel retailing, 33 percent were attributed to the failure of outsourcing. This was partially blamed on the insufficient understanding of some risks associated with outsourcing and often hidden within the outsourcing contracts. It could also be attributed to the selection of outsourcing approaches that were not appropriate. According to Barthelemy (2001, p. 67), the main causes of these outsourcing failures were noted to be outsourcing the primary activities of the company; not taking into account cultural, personnel, language, custom or personnel issues; not choosing the appropriate vendor; not being in control of the outsourcing process, working with an ambiguous contract, ignoring hidden costs and not having an exit strategy in place.
Barthelemy, J 2001, “The hidden costs of IT outsourcing”, Sloan Management Review, vol. 42, no. 3, pp. 60-69.
Choi, TM 2012, Fashion supply chain management: Industry and business analysis, Business Science Reference, Hershey PA.
Chopra, S & Meindl, P 2013, Supply chain management: strategy, planning, and operation, 5th edn, Pearson, Boston.
Coyle, JJ, Langley, CJ, Gibson, B, Novack, RA & Bardi, EJ 2008, Supply chain management: a logistics perspective, 8th edn, South-Western Cengage Learning, Mason OH.
Kersten, W & Hasin, AA 2010, Pioneering solutions in supply chain management: a comprehensive insight into current management approaches, Erich Schmidt, Berlin.
Krell, E 2006, “What is wrong with outsourcing?” Business Finance, vol. 12, no. 8, pp.18-24.
Lau, KH & Zhang, JM 2006, “Drivers and obstacles of outsourcing practices in China”, International Journal of Physical Distribution and Logistics Management, vol. 36, no. 10, pp.776-792.
Leavy, B 2004, “Outsourcing strategies: opportunities and risks”, Strategy and Leadership, vol. 32, no. 6, pp.20-25.
Lee, PKC & Humphreys, PK 2007, “The role of Guanxi in supply management practices”, International Journal of Production Economics, vol. 106, pp.450-467.
Rushton, A., & Walker, S 2007. International logistics supply chain outsourcing: from local to global. London, Kogan.