SN Company Subassembly Production Outsourcing Research

With development of economic globalization and specialization,production outsourcing has become increasingly mature and a large numberof multinational companies have prioritized production outsourcing as theirstrategic task. Production outsourcing has brought financial benefits to a lotof companies such as Dell and Cisco, etc. These companies have growntremendously due to production outsourcing. For labor intensive industry,outsourcing helps to mitigate labor cost increase effectively.Over30years since opening-up, maturity of suppliers in electricalapparatus industry has provided accessibility for production outsourcing. As aresult, companies have turned their focus to production of high strategicvalue which is closely relevant to their core competence and outsourced thatcommodity-like products production to low cost specialized suppliers tomitigate labor cost increase. Moreover, companies help suppliers complete new products integration and manage suppliers as critical supplier chainpartner to mitigate outsourcing risk and ensure reliability and efficiency ofsupply chain.This thesis is based on production outsourcing practice of SN Company.The thesis starts with analysis of status quo of electrical apparatusmanufacturing industry, points out motives of production outsourcing,analyzes three issues namely outsourcing decision, supplier selection andmanagement. The thesis comes up with decision tool at strategic, tactical andoperational levels, optimized AHP method for supplier selection metrics,suggestions for supplier management from cost, delivery, quality andcapacity perspective. At last the thesis gives some suggestions on controllingoutsourcing risks. The study will be helpful for other company’s outsourcingpractice.