Project 410 Week 3 Case Study


PROJ410 – Case Study 1

reduced operational control over outsourced activities! 3irect and indirect costs must #econsidered #y managers in ma(ing such decisions!

2.Three different alternatives and evaluation of these alternatives2.1.Local data center

-aving the data center close to customer is important factor in meeting customers" needsand therefore off+site/local data centers are located in the same country as the customer!By esta#lishing local data centers our company can e2pand and improve the offsitemodel! $hese local centers &ill allo& close interaction &ith the customer and uic( response to a service reuest #eing in the same geographic location and time )one as thecustomer! or(force may uic(ly move #ac( and forth #et&een the on+site team and thelocal team! $o compete more effectively &ith local service providers our company canrecruit locally hired managers mar(eters and possi#le technical associates in localcenters!

Service-level agreements

+ Service+level agreements are critical in the outsourcing #usiness! $he client company and the outsourcer must (no& &hat to e2pect from eachother! $he uality of the service+level agreements determines the uality of therelationship #et&een the client company and the outsourcer! ' lot can happen during thelife cycle of a data center services contract as people are reassigned to other pro%ectsleave the company or get promoted! Our company &ould need to (no& &hoseauthori)ation is reuired to fi2 escalations in data centre hosting5 ill there #e 64 #y 7services from the outsourcer.s employees5

Security of the data

 + Cloud computing in particular has lot of concerns a#out security!' remote service provider could #e transferring data over pu#lic data infrastructuresu#%ecting the company to data transfer ris(s! 8irtuali)ation poses ris(s &ith data fromdifferent customers hosted on the same server! 'lthough logical #arriers may #e in placeit.s easy enough to reach the conclusion that those #arriers are not as strong as physical


PROJ410 – Case Study 3

5n advanta$e o# usin$ &ot' truc,in$ and are'ousin$ su""liers is t'at a com"any can convert a lar$eamount o# #i.ed costs to varia&le costs 'ic' reduces a com"any2s &rea,-even "oint ma,in$ it less li,elyto succum& to a dro" in &usiness) *'e su&stantial #i.ed costs in t'is area include are'ouse #acilitiesstora$e rac,s #or,li#ts tractors trailers and maintenance #acilities) 9y eliminatin$ t'ese #i.ed costs acom"any can also ac'ieve a su&stantial im"rovement in its return-on-assets measurement) One "ro&lemit' t'is scenario is t'at t'e amount o# #i.ed costs only dro"s 'en t'e com"any actually sells o## its#acilities and e!ui"ment) Ot'erise t'e com"any ill 'ave to maintain t'em 'ile still incurrin$de"reciation e."enses and "ayin$ a su""lier to "er#orm t'e truc,in$ and are'ousin$ services) *'ere#oreas lon$ as assets can &e ra"idly dis"osed o# a com"any can cut into its &rea,-even "oint &y sitc'in$ itsare'ousin$ and truc,in$ #unctions to su""liers)5 are'ouse su""lier is use#ul #or t'e com"any as it ants to use a lar$e num&er o# distri&ution "oints as#inal assem&ly areas) Com"any ill &e a&le to &uild t'e smallest num&er o# com"onents to stoc, andstorin$ t'ese com"onents at a ide ran$e o# distri&ution locations 'ic' are t'en assem&led accordin$ tocustomer s"eci#ications at t'ose locations) *'is results in t'ousands o# "ossi&le "roduct variations &ein$s'i""ed it' a minimum o# inventory) *'is ill allo t'e com"any to reduce its investment in inventory'ile $ettin$ #inis'ed "roducts to customers sooner it' no additional investment) Multi !ui"mentManu#acturin$ %td can s'i#t inventory amon$ a multitude o# locations as customer demand s'i#ts over timeso it can o##er t'e s'ortest "ossi&le delivery times) Maintainin$ a lon$-term relations'i" it' a t'ird-"artylo$istics "rovider ena&les com"anies to rea" si$ni#icant &ene#its #rom outsourcin$)

Cost savings report

-Savin$ o# o"eratin$ cost o# +00 truc,s #leet :Cost ran$es #rom 400 to +00;truc, "er mont'< =USD +00 > :5vera$e USD 4+0 "er truc,< > 1? = USD ?)@ million-Cas' 8enerated out o# sellin$ +00 truc,s to t'e su""lier;vendor or a t'ird "arty-6nsurance cost Saved = USD +00 > ?+000 = USD 1?)+ million-Savin$ Aare'ouse and 6nventory carry cost : +0000 S! #t o# are'ouse s"ace > USD B "er S! #t "er mont'< = USD 3)B million-Aor,ers em"loyed #or loadin$ and unloadin$ truc,s can &e em"loyed some'ere else in t'ecom"any and t'us resultin$ in cost savin$ o# : 100 or,ers > USD +0000< = USD + million-5dditional Cost savin$ o# ot'er e!ui"ments involved in t'e are'ousin$ and truc,in$ = USD 1million


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