Outsourcing vs

In-house Production

Outsourcing “A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.”

• Lower costs • Innovation• Support Increased

Demand

• Contribute to Efficiency

• Skilled Workforce

Advantages vs Disadvantages

• Fewer staff required• No in-depth specialist

knowledge of the scanning process itself is required

• Less investment required

• No pressure to operate at full capacity

• Intensive preparatory work

• Time-consuming preliminary arrangements

• Dependent on the external supplier's deadline

• Cost of logistics

In-House Production“Conducting operations within a company using internal “technical” resources while utilizing its own employees and time within the production process.” • Requires holding ready

capacities in terms of equipment, qualified staff, and other resources

• Only in-house management decisions to mobilize resources

• No preparatory work of procurement, specification writing, request for offers, evaluation, contract and time loss

• Typical example (IT industry)

• Flexibility (communication)

• Quality control (over production process)

• Speed to market & updates (instant reaction)

• Developing essential technology skills

• Production expense• No economies of

scale • Limited skills• Tying up staff

resources

Advantages vs Disadvantages

Within SimVenture

Top tipsOutsourcing or In-house production?

Step-by-step planStage 1: Describe your own situationStage 2: What can be outsourced and what not?Stage 3: Which sub-contractors?Stage 4: Ask for quotationsStage 5: To manufacture or outsource? Stage 6: Implementation

Conclusion

• Expertise and modern technology• Determining factors for external

services • The requirement of internal expertise • Cooperation results in expanding

knowledge

1. Which one of the following is not an advantage of Outsourcing:a) Lower costsb) Increased supportc) Cost of logistics d) Skilled workforce

MCQs

2. Which one of the following is typical for In-House production: a) Dependence on external suppliers b) More resources spent on logisticsc) Tying up staff resourcesd) Long communication routes

3.How many stages are there in the step-by-step plan?a) 3 b) 4c) 6d) None of the above