Outsourcing

3x puncte

categorie: Marketing

nota: 9.85

nivel: Facultate

. A manufacturing organisation normally do not want to waste its management resources to this functions. Therefore, they prefer to outsource this function to logistics companies which possess all the necessary skills and technology in this service. For example, Marks and Spencer, one of the world's leading retailers has outsource its distribution function to Exel , one of the leading companies in [...]
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. A manufacturing organisation normally do not want to waste its management resources to this functions. Therefore, they prefer to outsource this function to logistics companies which possess all the necessary skills and technology in this service. For example, Marks and Spencer, one of the world's leading retailers has outsource its distribution function to Exel , one of the leading companies in supplying logistic service. M&S has approached Exel to take control of its complex distribution service.

Now, Exel provides a distribution service for 23 M&S stores in South England, and also deals with M&S in France, Spain and Hong Kong. Exel has bought a revolutionary technology to M&S export operation by enabling 10 suits to be shipped in the space normally occupied by four garments. In addition, M&S customers start to get a high level of service because stores could be replenished quickly. All these and other benefits M&S has gained through outsourcing its complex distribution service. There are many advantages which a company could get from outsourcing its distribution functions.

It could reduce the operating cost of the firms. A study which has been conducted in 1993 reported that a company could reduce 9% of its operating costs by outsourcing. When a company is outsourced its distribution function to world-class provider, it would reduce the cost of this function as the provider would be more efficient and specialist in this function. Also, by outsourcing non-core activities like distribution, a company could focus on its core activities!

and increase revenues. . Managers realise that by outsourcing their routine, nonessential operations, they can better focus on the core competencies that truly differentiate them from competitor. For example, Ericsson one, of the leading companies in the telecommunication industry, wanted to reduce its costs in the supply chain by finding a solution to its warehouses in Philippines. Ericsson is always trying to reduce costs in different areas of business, this is including, the supply chain so as to save money and focus on Research and development. Therefore, Ericsson turned to Exel.
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