1 What should Dell consider when evaluating the impact of an offshoring decision according to Ferreira...

1 What should Dell consider when evaluating the impact of an offshoring decision according to Ferreira and Prokopest?

Expert Solution

The impact of offshoring on the elements of total cost:

Supplier price : costs from direct materials, direct labor, indirect labor, local taxes, manufacturing costs.

Terms : payment terms,

Delivery costs : in-country transportation, ocean/air freight,

Inventory and warehousing : include in-plant inventories, in-plant handling, supply chain inventories, and supply chain warehousing costs.

Cost of quality : cost of validation, cost of performance drop due to poorer quality.

Customer duties, value added-taxes, local tax incentives.

Cost of risk, procurement staff, broker fees, infrastructure, and tooling and mold costs.

Exchange rate trends and their impact on cost

offshoring may result in failure if only focusing on production unit cost rather than total cost
Ignoring critical risk factors.
Global supply chain with offshoring increases the length and duration of information, product, and cash flows.

keosha answered 5 months ago

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