Introduction
This report has been written at the behest of Mr. ABC, the CEO of XYZ Medical Manufacturing and Supplies Company Limited, in response to increasing concerns among employees following intentions to outsource certain manufacturing operations to businesses abroad. After consulting with several departmental heads within the organization, I collected findings and made a series of recommendations as discussed below.
Findings
Departmental heads reported to the HR Department that their juniors were worried that they would be among the 200 employees who would lose their jobs following outsourcing to foreign companies. Many personnel has been psychologically prepared to grow professionally within the organization, but they are now confused about the next move they would make. Departmental heads are also concerned that they were not consulted by the management on the plans to start outsourcing manufacturing to foreign businesses.
There is a concern that the organization would be affected by delayed delivery of products from abroad, and this would have a negative impact on its earnings. Most companies that outsource their products have often kept customers waiting for products to arrive from overseas. This would result in the loss of customers to business competitors. It is expected that the quality of products from overseas companies would be lower than what workers produce within the organization.
This would be attributed to the lack of close monitoring of workers by a person who knows the customer needs. In fact, the initial products would be of high quality, but the quality would decrease with time. There is also concern that the initial goal of reducing costs would erode as time passes. Delivery costs would increase, and this would result in lower profit margins. In addition, an increase in labor wages would culminate in higher operating costs.
Recommendations
- The management should find other ways of reducing costs other than adopting outsourcing.
- One tested option for outsourcing that would result in the reduction of costs is Lean Manufacturing and Six Sigma. This would also increase the quality of medical products supplied to hospitals.
- All departmental heads should be consulted when making decisions that would result in major changes within the organization.
Conclusion
Outsourcing would not result in a long-term reduction of costs and improvement of the quality of medical products. The organization should adopt other ways of reducing costs and improving the quality of products. This would not lead to the loss of jobs and the shutdown of one factory.