Question

What potential problems can be encountered when a company chooses to outsource?

Answer 1

Although a viable option for any supply chain, outsourcing is not without its pitfalls and shortcomings in the form of:

1. QUALITY CONTROl
The consideration of quality is based on the capability of the third party and therefore, while they might have the necessary capacity, they might not have standardized processes to achieve a high level of quality and therefore, it becomes a relevant problem.

2. LACK OF CONTROL
While the company holds the power in terms of acceptance, it does not have control over the process of the third party and therefore, cannot create the necessary factors for a qualitative process.

3. COMMUNICATION AND GEOGRAPHICAL BARRIERS
Another factor leading to the aspect of the problem is the consideration for language and the barriers brought forward by geographical differences.

4. EXTERNAL FACTORS SUCH AS POLITICAL, ECONOMIC AND SOCIAL FACTORS
While we need to consider outsourcing from an ethical front on our end, the uncertainty in the other country, such as due to political or economic reasons can create a substantial problem for us.