Insourcing/Outsourcing

In: Business and Management

Submitted By aej008
Words 1263
Pages 6
October 1, 2013
FlexCon Piston Decision

Perform a quantitative insourcing/outsourcing analysis using the data provided. What qualitative issues might affect your final decision? Identify any costs or issues that are not part of your analysis that might affect your decision. What is your recommendation regarding what FlexCon should do with its family of pistons? Support your arguments with evidence gathered during your analysis.

FlexCon is a company that prides itself on the quality of its pistons. Lately they have been relying on suppliers for major components while manufacturing simple items with relatively small differentiation. By doing this, too much of their talent is going to waste leaving them with a big decision of whether to keep outsourcing or to insource. They are already heavily dependent on suppliers for critical components. The cost it takes to insource is greater than the cost to outsource but deciding to outsource may jeopardize their quality. One critical issue that affects the decision to outsource is whether to jeopardize their quality. It was said that by cross-training employees and putting them in teams, there was a 30% increase in quality and 20% gain in productivity when making the pistons. Gaining quality and productivity are definitely reasons to continue insourcing. If they did decide to outsource it would leave room for developing new products or expanding an existing product. Stated in their 6 key trends that influence insourcing and outsourcing, “Firms are continuing to become more highly specialized in product and process technology.” They should not waste time trying to explore new products; instead they should keep improving the product they have to become more specialized so they can contribute greater cost differentials between firms. Developing another product will take time to experiment…...

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