Running Head: OUTSOURCING AND OFFSHORING
Outsourcing and Offshoring.
OUTSOURCING AND OFFSHORING
Third-party logistics is a service that allows one to outsource the management
operation from warehousing activities and all other services up to delivery, which enables the
organization to focus on its core activities. 3PL provides functions such as; warehousing,
packing, transportation, packaging, forecasting of inventories, packing and picking, freight
forwarding, and order fulfillment services. Using a third-party service provider helps in cost
reduction incurred. The business can scale down or up depending on market demand, faster
shipping, which enhance customer services, help in testing new markets without having to
invest in employees or warehousing facilities (ovács, Szabó, & Pató, 2016). One is also able
to handle and manage the international market, lower risks of problems that would otherwise
be incurred by the company during transport.
Several factors drive organizations to go international. One factor is cost
economics in manufacturing. In different countries, the cost of labor and production costs
will vary due to exchange rates. Therefore, outsourcing and offshoring from a country with a
lower exchange rate and low cost of labor help in lowering the cost of production (Joubioux,
& Vanpoucke, 2016). Selection of talent shortages such that the company will access more
talented employees from another country to boost the business, outsourcing makes the firm
more global (globalization), offshoring and outsourcing has been embraced by many and
hence seen as the new normal.
The main factor...
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