Benefit and Risk of Outsourcing and Offshoring

Added on - 21 Feb 2021

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RESEARCHPROJECT
Table of ContentsTOPIC:-............................................................................................................................................3CHAPTER 1: INTRODUCTION....................................................................................................3Overview:-...................................................................................................................................3Background:-...............................................................................................................................3Rationale:-..................................................................................................................................3Aims:-..........................................................................................................................................4Objectives....................................................................................................................................4Research questions......................................................................................................................4CHAPTER 2: LITERATURE REVIEW.........................................................................................4Concept of outsourcing...............................................................................................................4Benefits that Yusen logistics get through outsourcing its business operations...........................5Risks Yusen logistics face while outsourcing of business..........................................................5The relationship between outsourcing logistics and growth of Romanian Industry...................6CHAPTER 3: RESEARCH METHODOLOGY.............................................................................7Type of investigation...................................................................................................................7Research Approach:...................................................................................................................7Research philosophy...................................................................................................................7Ethical consideration:..................................................................................................................7Data Collection Tools................................................................................................................8Data Sampling Tools...................................................................................................................8CHAPTER 4: DATA ANALYSIS & INTERPRETATION...........................................................8CHAPTER 5: CONCLUSION......................................................................................................17CHAPTER 6: RECOMMENDATION & REFLECTION............................................................18RECOMMENDATION............................................................................................................18REFLECTION..........................................................................................................................18REFERENCES..............................................................................................................................20
TOPIC:-“To analyse the benefit and risk of outsourcing and offshoring for logistic in Romanianindustry”. A study on Yusen Logistics.CHAPTER 1: INTRODUCTIONOverview: -Outsourcing refer to the process of hiring a party outside the company in order to creategoods and perform services that are previously performing through in-house process bycompany's employees. This is basically adopted by a company in order to reduce the cost ofcompany and achieving economies of scale(Alexandrova, 2015). This is because it affects thewide range of jobs that are ranging from customer support services to manufacturing or backoffice. The Romanian logistic industry is also putting efforts toward the adopting outsourcingpractices in order to reduce the cost of transportation and expanding the business operations ofcountry by providing a medium to offshore the product or services. One of the Romanian basedcountry named as Yusen Logistics is also working over this in order to outsource its businessoperations. The main reason behind this is that outsourcing help Yusen organisation to easilyaccess the advanced technology, expertise and be able to reduce its cost.Background:-In order to conduct this investigation Yusen logistics has been consider which is one ofthe largest and fastest growing logistic service provider of Romania. It offers complete supplychain solution to the international blue-chip client which deals in retail, automotive, FMCGsector etc. (ROMANIA 2019). In addition to this it also operates an intermodal terminal inBucharest handling block train services which is between the Black sea port of Constanta andBucharest and other intra-European freight(Blažek, 2015). This organisation operates at approx17 locations across the Romania and not is planning to outsources its business to other nation inorder to expand its business operations which support in achieving higher profit.Rationale:-The main reason behind conducting this investigation is to identify several advantage aswell as risks that a company will get after outsourcing logistic operation at another place. Thisinformation will further have used to recommended the appropriate actions that can be taken toavoid those risks(Bucoveţchi, Stanciu and Badea, 2019). This investigation also support
researcher in enhancing its skills as well as knowledge regarding the particular topic of concernas well as techniques that are used to perform investigation effectively. This research can befurther used for academical purpose which help in enhancing the knowledge of students towardthe outsourcing of logistics.Aims:-“To analyse the benefit and risk of outsourcing and offshoring for logistic in Romanianindustry”. A study on Yusen Logistics.ObjectivesTo learn about the concept of outsourcing.To identify the several benefits that Yusen Logistics get through outsourcing its businessoperations.To determine risk that Yusen logistics will experienced while outsourcing its business.To ascertain the relationship between outsourcing logistics and growth of RomanianIndustry.Research questionsWhat is the concept of outsourcing?Describe about several benefits that Yusen Logistics get through outsourcing its businessoperations?What are the risk that Yusen logistics will face while outsourcing its business?Explain about the relationship between outsourcing logistics and growth of Romanianindustry?CHAPTER 2: LITERATURE REVIEWConcept of outsourcingAccording toGuerreiro, 2015,outsourcing refers to the practice of business in whichcompany hires another company or an individual to handle the operations and perform taskwhich was earlier done by the same company. Romania is best known for its service providingservices in BPO, IT and R&D. It stand at 13thposition in the terms of financial quality, skills fpeople and business availability(van Buren and et. al., 2016). With the help of outsourcing,companies are able to lower down their cost and also able to improve the efficiency. Theoutsourcing enable the company to appoint skill employees so that they are able to deliver more
advanced services. It also reduces the overhead cost of the company as because the outsourcingcompany uses its own facilities, equipment to perform the task(Salanta and Popa, 2015).According to the latest ABSL report, it revealed that 90% of the companies which areparticipating in outsourcing is recommending Romania as potential investor to conduct thebusiness operations. At present banking and insurance sector covers 16% of Romania market,15% in telecom sector, 8% in healthcare sector, 14% in industrial sector and around 7% inlogistic, pharmaceutical sector. As many international sector are outsourcing in Romania, eachsector is expecting to grow a lot.Benefits that Yusen logistics get through outsourcing its business operationsAs per the view point of Lee Chris, 2018, the rise in on-demand delivery expectations hasleads businesses to rethink over their traditional logistic operational model and improve it byoutsourcing the entire function to new location. This support in reducing the complexity ofmaking fast delivery options possible without spending much cost over it. Following are somebenefits that Yusen logistics get with the outsourcing of its business,Access to expertise:-Outsourcing logistics includes people, technology and processes ata level beyond then a manner a single company can develop independently. Hencedespite of fluctuating capacity, enhanced shipper disruption and demand of YusenLogistic's customer can be manage much effectively by improving the supply chainmanagement using information and analytics to drive decisions.Access to technology:-Another major benefit that Yusen Logistics gets throughoutsourcing logistics is that it will be able to access latest technology(Rennung,Luminosu and Draghici, 2015). On of the best example that can be given for this isInternet of things functionality which support Yusen logistics to improve its standard ofsupply chain as it is an integrated and very essential part of maintaining customers forlonger period of time.Risks Yusen logistics face while outsourcing of businessAccording to the view point of Lee Chris, 2018, outsourcing of logistics is verybeneficial for Yusen logistic company as it provide more benefits and help in reducingoperational cost. But apart from this outsourcing also includes several risk that may affect thebusiness operations of Yusen logistics. These includes,
Loss of control:-Most of outsourcing logistics results in adoption of client branding foremployees as well as assets and as a result of which relationship get invisible to customers.Hence the party in another country will handles the operations of Yusen logistic and it will beresponsible for maintaining relation with customers(Pomponi, Fratocchi and Rossi Tafuri,2015). Therefore its management can affect the goodwill as well as perception of customertoward company.Integrating information technology:-Outsourcing of logistics require Yusen logisticsto get integrated with IT which is one of the biggest challenge as data flow between systems aswell as parties which require deep visibility to manage and optimization of network. This mayleads to misuse of data that can affect business operations, practices and brand image ofcompany.The relationship between outsourcing logistics and growth of Romanian IndustryAccording toGurung and Prater, 2017, Logistic is a important tool in the development ofthe economy.A well organised logistics and transport facility is required in country in order toimprove the efficiency of all over the world. Around 1.5% of the population of Romania isengaged in outsourcing and it offers job to 1,25,000 of its employees. In order to meet thedemand from the growing pharma industry in Romania, Yusen logistic helped a lot. This led toincrease the overall sales of pharmaceutical during from 11.8% to 3.15 million. In the year 2015,Romania has spent over 4.9% of GDP on health. The logistic market in Romania has grownbecause of the foreig investrs have entered in the field of different activities due to the lower cost(Oshri, Kotlarsky and Willcocks, 2015).As a fact, the logistic space also start growing and thusthe volume of transactions on the logistic market reached to 250,000 meter square. In the year2007, the rate of occupying the logistics space was around 98%. Overall it is said that, thelogistic industry has led to the growth of Romania in the terms of reducing the work of backoffice as its saves the time for other activities and help in increasing the productivity of thecountry.
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