Companies using outsourcing

Almost half of companies that declared they use outsourcing indicated that they identify threats but do not manage outsourcing risk. As few as 28 per cent of the researched companies identify threats and undertake actions to curb risk in relationships with outsourcing partners. A similar munber of companies do not manage risk at all, which means they do not see the significance of threat identification and risk mitigation in the supply chain. Such an approach demonstrates a low awareness 

President Managing Director Chief Financial Officer Purchasing/Sourcing Director Sales Director Import/Export Director QC Manager Rish Manager Someone else No one 

The decision regarding outsourcing is related to speculative risk. The decision-making process should be supported by risk assessment, both before and during cooperation. At this point, companies use qualitative (28%) and quantitative analyses (25%), which are indisputably methods used for risk analysis. What is alarming is that the assessment of the 

Some companies (39%) consider the opinions of their employees on cooperation with an outsoiucing companies to be a particularly important source of information about the level of supply chain risk. The employees build the relationships with business partners and face the operational risk each day. That is why the top management looks for the employees with following qualities commitment, a willingness to solve problems, sense of responsibility, diligence and reliability. This opinion is, at the same time, supported by an end-customer opinion poll (22%). The third most frequently used method of assessing an outsourcing 

I Reporting comments to a representative of the outsourcing company I Imposing financial penalties on the outsourcing company Application of other sanctions (non-financial) 

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Buyers may use outsourcing as much as possible. This is a modem trend (or perhaps it merely seems so) and often finds favor. Also, buyers may require additional labor services or may relinquish much of the day-to-day water treatment work normally accepted as an in-house function and pass over to water treatment service company contractors. This may include functions such as the disposal of empty chemical drums, chemical tank fillup, or equipment hookups. Such service-oriented contracts are fine, but the buyers cannot totally abrogate all control and have to take responsibility, in the final analysis, for policing their own contracts. 

The last type is comprised of academic institutions that provide assistance with custom synthesis, dosage form development, pilot-scale production, and production of clinical supplies in order to obtain additional income to support their academic programs. They have no interest in, nor are they equipped for, commercial production. Companies seeking outsourcing should be aware that students and faculty could form part or all of the staff of their operations this may be a disadvantage when considering using this type of contract manufacturer. 

As companies desire to get more and more lean, logistics will be one area that companies are outsourcing to logistics suppliers. I have seen cases where a customer will negotiate a contract with a trucking compare for all deliveries to a particular facility. With this type of agreement the suppliers are told to use this trucking comparer to get materials to the facility. In theory this should reduce the costs for the customer, but the performance... 

Note that in the solution, the cost per unit to subcontract product B is 20 (i.e., 93 — 73), while the cost of outsourcing product A is 15 per unit. Why is it optimal for the company to outsource product B instead of product A It is clear that product B uses more bottleneck resources, i.e., the capacity of machine X, than product A. In other words, the make-buy decision now requires identifying the internal bottleneck resource and then finding the best way to minimize cost using the internal resource. The linear programming tool enables this bottleneck resource to be identified and generates the optimal make-buy decision. 

Levels 1 and 2 of Information Technology are characterized by point solutions, generally intended to improve some facet of performance for an internal function and, as we note, a silo mentality exists within the company. No consistent use of technology resources occurs as most work is devoted to getting the basic systems in place, particularly accounting. Companies often outsource a portion of the effort with little or no strategic benefit. Few corporate standards are in place as divisions and business units set their own directions. The architecture is usually product based. If there is a corporate architecture, it is from a centralized team and is often an academic exercise that is little used. 

CROs are growing and mutating making it difficult to identify specific trends. However, one thing is certain, pharmaceutical, biotechnology, and medical devices sponsors expect to increase outsourcing to the several hundred CROs. In fact, pharmaceutical companies have already increased their use of CROs from 28% of clinical studies in 1993 to 61% in 1999. This... 

Many companies have developed their own factored estimates using computer spreadsheets based upon their in-house experience and cost database information that they have built from company project history. For detailed estimates, the job is outsourced to design-construction companies that have the staff to perform those estimates. 

A dimension of the increasing disintegration of pharmaceutical R D is the growing use of contract research organizations (CROs) to conduct clinical trials of new drugs. By 1999, 23% of trials were outsourced to CROs (Azoulay 2004, pp. 1593,1600). In general, the more data-intensive projects are outsourced, while knowledge-intensive projects are more frequently undertaken within pharmaceutical companies (p. 1592). 

This sale and back-lease model is applied by many other pharmaceutical companies. It enables the company to dispose of assets without being forced to lay off employees. The net effect for the industry as a whole is that statistically, the share of outsourcing is increasing. However, the problem of underutilized capacity persists. For a hne-chemical company, the acquisition of an API plant from a pharma company is problematic. Once the supply contract, offered by the pharma company as an incentive for the acquisition, expires, the problem arises as to what the capacity should be used for. This is all the more the case as the plants usually are designed to manufacture just one product and therefore are not truly multipurpose. Last but not least, the plants have been run as cost centers and the implementation of a lean production... 

Undoubtedly, a big barrier to the introduction of SC technologies in pharmaceutical plants is the high capital and operating costs of such equipment, especially if they are used for the production of a limited number of materials in a complex portfolio. As pharmaceutical companies outsource more and concentrate on in house manufacture for the later stages of the synthetic route, the lack of SC reactor facilities at contractors and fine chemical suppliers limits the development of reactions in SC fluids. 

Figure 2.9. Accelerator mass spectrometer used for bioanalytical analysis at Xceleron (formely CBAMS). Pharmaceutical companies have not adopted AMS as an in-house technique because of cost and size of instrumentation (compare the scale of the instrument to the kitchen in the lower left). Samples are outsourced to companies that specialize in the technique.

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