Example: A high-tech consumer product manufacturer in Southeast Wisconsin (Milwaukee) is investigating outsourcing possibilities for an important electronic component used in their final product. The company is considering replacing the current supplier (located in Janesville, about 80 miles southwest of Milwaukee). They are interested in a supplier strategy of discontinuing the current supplier and using a supplier based in Shenzhen (20 miles north of Hong Kong) in Southern China.

Discuss the following for the outsourcing example described above:

1. Possible benefits of the decision to outsource to the supplier in Shenzhen

2. Risks associated with the decision

3. Effects on components of total cost of ownership

Answer rating: 100% (QA)

1 Possible benefits of outsourcing to the supplier in Shenzhen Cost Savings One of the primary motivations for outsourcing to Shenzhen could be cost savings Labor costs in China are typically lower co... View the full answer