Aerospace

Industry
•Corporate Social
Responsibility and
CSR Initiative

•GROUP 7
Major Reservations & Cons of Outsourcing
The Wichita Factory
• New owner is expected to more effectively squeeze out labour and other costs and bring the work from other
manufacturers also.
• New owner can Outsourcing requires precise and more complete specifications because disputes arising from
omissions or changes would be subject to legal remedies.
• High Overheads on support functions :- Outsourcing expected to create new internal tasks that had not previously
existed. Normal accounting practices do no allow these unavoidable additional cost to be billed against that
particular item of work and hence it eventually gets misrepresented. Extra cost for overseeing supplier’s work
cannot be accounted properly.
• Loss of confidentiality and security-Boeing had to abandon some degree of privacy over its core business secrets,
when outsourcing. Additionally, it had to pass on information such as critical details about business processes and
safety measures, even if partners were thoroughly tested for their internal security processes. There is always a risk
of data getting stolen or fraud being committed.
• Co-ordination and communication issues- Since different parts are manufactured in different locations, the supply
chain is stretched too long. Time difference, language barriers, other communication difficulties may disturb the
schedule.
• Unexpected cost increase- These were mainly due to increased co-ordination and labour cost, penalties due to
delayed deliveries, additional redesigned cost. bring the work from other manufacturers also.
Major Reservations & Cons of Outsourcing
The Wichita Factory
• Safety & Quality due to outsource partners negligence brought
huge negative impacts to Boeing.
• Loss of complete control over business- Once a business part is
outsourced to a 3rd party, the company is no longer in full control of
that aspect.
• Blind imitation of Toyota’s three tier supply chain- Toyota worked
closely with its suppliers and responded to their concerns with
integrity, with high attention to product quality. In contrast Boeing
adopted Toyota’s system in superficial way, imitating it blindly.
Major Reservations & Cons of Outsourcing
The Wichita Factory
• High Labour Costs
• New owner is expected to more effectively squeeze out labour and other costs and bring the work from other manufacturers
also.
• Poor Labour Relations
• New owner can Outsourcing requires precise and more complete specifications because disputes arising from omissions or
changes would be subject to legal remedies.
• Outsourcing expected to create new internal tasks that had not previously existed. Normal accounting practices do no allow
these unavoidable additional cost to be billed against that particular item of work and hence it eventually gets misrepresented.
• Extra cost for overseeing supplier’s work cannot be accounted properly.
• Loss of confidentiality and security-Boeing had to abandon some degree of privacy over its core business secrets, when
outsourcing. Additionally, it had to pass on information such as critical details about business processes and safety measures,
even if partners were thoroughly tested for their internal security processes. There is always a risk of data getting stolen or fraud
being committed.
• Co-ordination and communication issues- Since different parts are manufactured in different locations, the supply chain is
stretched too long. Time difference, language barriers, other communication difficulties may disturb the schedule.
• Unexpected cost increase- These were mainly due to increased co-ordination and labour cost, penalties due to delayed
deliveries, additional redesigned cost. bring the work from other manufacturers also.
 Name Roll no.

Chandury Satya Madhavi EPGP-12A-031

Ipshita Biswas EPGP-12A-041

Abhishek Chowbey EPGP-12A-002

Barathy Paramasivan EPGP-12A-133

Thank you Saravanan Subramanian

Sneha Mohan
EPGP-12A-098

EPGP-12A-107

Vallabh Shrikant Chavan EPGP-12A-122

Vamsi Sagar Naidu EPGP-12A-123

Vipin Range EPGP-12A-128

Kulbhushan Kanadka Sachidananda EPGP-12A-050

Nitin M Ghag EPGP-12A-068