Part (b) of the question asked to assess the risks of oursourcing to the Far East and recommendation on controlling those risks (10 marks). I attempted the question but my answer has no single point that are mentioned in BPP’s answer. Now I appreciate that my answers will never be the same as those of BPP but I’m concern that my answer may be irrelevant.
My answer in summary:
1. Risk – Quality issue; Control – Quality check performed by VSYS
2. VSYS may make some employees redundant thus reputation risk – restructure of organisation; existing employees may perform the quality checks rather than being made redundant-this is possible because the employees have a degree in computer engineering (local univerdity runs courses specifically for potential employees of VSYS)
3. Low quality material used hence jeopardising quality – VSYS can supply the material used to ensure standard of product.
4. Reliance on suppliers; problem if they cannot meet demand – VSYS can have contracts in place with suppliers; not meeting demand penalities being made to VSYS. Contracts should be short-term and can be renewed, for e.g, one year- hence if VSYS is not satisfied with a particular supplier contract may not be renewed therefore saving VSYS from any compensation that can be paid if it had to terminate the contract before the agreement date.
Can you please confirm whether my answer is irrelevant?
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