THE IMPACT OF OUTSOURCING DECISION ON MATERIAL AVAILABILITY

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY

Productivity is influenced by input reliability and material accessibility, particularly in developing nations. Storage devices can be used to manage unstable services for various resources, such as water (Baisa et al. 2010). Yet, since storing power is prohibitively expensive, agents must react in different ways while using electricity. Self-generation, or.rms investing directly in equipment to generate electricity on-site, is a typical reaction to ongoing power supply concerns. Blackouts lower productivity by eliminating alternative investment options (Reinikka and Svensson 2002). 2 In contrast to the literature, this research investigates how China’s enormous and quickly expanding economy is affected by the start of blackouts. We examine how businesses react to blackouts using enterprise-level panel data, and we calculate the lost productivity and environmental effects that occur. Early in the new millennium, industrial clients in practically every Chinese province had blackouts brought on by resource shortages (IEA 2006). 3 Despite efforts to develop new power plants quickly, the market is competitive due to double-digit economic growth. Moreover, there is still a price limitation on retail electricity and no price flexibility in reaction to shortages.
Eventually, preference was given to residential and business electricity users over industrial users. Blackouts of this magnitude may be historic, but China continues to be quite concerned about them. Even in the summer of 2011, China experienced severe power outages.

Although outsourcing is still in its early stages in Nigeria, it has benefited many businesses and given many Nigerians access to employment prospects (Orji, 2002). Businesses that outsource a portion of their production and service processes gain from greater productivity and revenues.

The corporation considering outsourcing has a lot of duties and things to take into account. A company may decide to contract or outsource some of its production process to another company or vendor to handle if it needs to improve and accelerate its production process. Wastes have been a significant problem in emerging nations, especially Nigeria. It is concerning that businesses are unable to efficiently manage their outsourcing process. Domberger (1998) emphasizes the significance of creating a “framework of analysis which gives an organized, methodical approach to contracting decisions and outsourcing strategies” after identifying non-core operations (p.9).
The significance of formal procurement processes is discussed in Farney et al. (2004) and Gay and Essinger (2000) in regards to developing a global outsourcing vision and choosing outsourcing providers.
Unfortunately, it can be very challenging to accurately compare internal processes to external suppliers, even when organizations set out to properly examine an outsourcing option (Hayward & McDonagh, 2000).
The way that organizations identify procedures like Order-

Accounts or Entries There is minimal standardization in how businesses manage and provide these processes. So, according to Davenport (2005), it is exceedingly challenging to compare what occurs inwardly to what is offered externally. The advantages of creating business process standards to aid in the improvement of internal skills are further discussed by Davenport. Given that specialized skill sets are necessary for outsourcing, it is expected that the supply of outsourcing skills will continue to grow. Tim Collins’ evolving role as a procurement specialist was highlighted in Govpro (2005), and Hazra (2004) explains how it is now crucial to adopt a longer-term, more strategic view of outsourcing options. These views are supported by Quinn in a recent interview; Companies might have brilliant designers, lawyers, etc., but might not have the capability needed for managing outsourcing. Gay and Essinger (2000) argue that a strategic approach to outsourcing is most effective when organizations are willing to adopt a new perspective on management control with the focus on output rather than inputs.

They must be able to compare various cost structures and comprehend the strategic risks involved in outsourcing to one partner as opposed to another. 
successful outsourcing manager must be able to inspire partners to take the necessary action. 
They need to be able to keep an eye on the deal without interfering, using software and direct touch in order to gather lead signals. 
They require completely distinct set of managerial skills, and the core of these skills is capacity and readiness for learning.

1.2 STATEMENT OF PROBLEM

In Nigeria, where outsourcing is still in its early stages of development, businesses that use it report various advantages. 
Yet, waste of labor and raw materials has been significant issue for businesses who outsource. 
According to research by Farney et al. (2004), the majority of businesses in developing nations fail as result of wastes that cause material shortages and poorly designed outsourcing processes and decisions. 
Low labor cost nations like China and India have seen tremendous growth in recent years, outsourcing goods and services to more advanced Western economies. 
Yet, internal infrastructures in emerging nations are sometimes insufficient to handle such rapid expansion, leading to the accumulation of garbage. Even while company may have excellent designers, lawyers, etc., it may not have the expertise to manage outsourcing. They must be able to compare various cost structures and comprehend the strategic risks involved in outsourcing to one partner as opposed to another. 
successful outsourcing manager must be able to inspire partners to take the necessary action. 
They need to be able to keep an eye on the deal without interfering, using software and direct touch in order to gather lead signals. They require completely distinct set of managerial skills, and the core of these skills is capacity and readiness for learning.

1.3 OBJECTIVES OF STUDY

Examining the effects of outsourcing decisions on material availability is the study’s primary goal. The study’s precise goals are:

To assess the factors considered in the Lagos-based seven Up bottling company’s outsourcing decision.
To determine the seven up bottling company’s outsourcing issues
To investigate how the Lagos-based seven Up Bottling Company’s decision to outsource has affected the supply of materials.
To make better outsourcing recommendations that the seven up bottling company could use.

1.4 RESEARCH QUESTIONS

The researcher created the following study questions to help her reach the aforementioned goals and objectives:
What stages of the outsourcing process does the management of the seven up bottling company go through?
What outsourcing issues does the seven up bottlers face?
What impact do outsourcing decisions have on the availability of materials?

1.5  RESEARCH  HYPOTHESIS

The researcher developed the following assertion to support the study’s findings:
Ho: The performance of an organization and outsourcing strategy do not significantly correlate.
Hi: An organization’s performance and its outsourcing strategy are strongly correlated.
Ho: The availability of materials during the production process is not immediately impacted by decisions about outsourcing.
Hello: Choices about outsourcing have direct impact on the production process’s capacity to access materials.

1.6   SIGNIFICANCE OF THE STUDY

The study will highlight different outsourcing tactics that the management and personnel of the seven up bottling company may find useful. 
In order for procurement managers and officers in firms to build strategies to effectively address these problems, the study will also highlight case studies of outsourcing challenges.

1.7   SCOPE OF THE STUDY

The seven-up bottling company in Lagos will be used as case study to discuss the effects of outsourcing decisions on material availability. 
Due to cost and time limitations, the researcher was unable to cover wider area, so all conclusions and recommendations from the study may not accurately reflect outsourcing management and strategy in Nigeria.

1.8 LIMITATIONS OF THE STUDY

Nonetheless, there were some limitations that had an impact on the research.
Financial limitations: Visiting numerous small businesses in the many towns that made up the local government was rather expensive when it came to gathering information and bread samples.
Time Restraint: The study was also constrained by the time allotted for completion of the investigation.

1.9 DEFINITION OF TERMS

Contracting out an internal corporate process to third-party company is known as outsourcing. 
Transferring people and assets from one company to another is common aspect of outsourcing, although it is not always the case.
Everything made of matter, which is composed of one or more substances, is considered to be material. 
Examples of materials include wood, cement, hydrogen, air, water, and any other kind of substance.  In this sense, materials are the parts required to make something else from buildings and art to airplanes and computers. 
In this sense, materials are the components needed to create something else, such as computers and airplanes as well as structures and works of art.
Materials Management: Materials management can deal with logistics that handle the observable elements of supply chain or with campus planning and building design for the transportation of materials. 
This involves buying, shipping, and warehousing standards as well as the acquisition of replacement and spare parts as well as quality control of purchasing and ordering such parts.
Material Availability: Based on material condition, Materiel Availability measures the proportion of system’s entire inventory that is operationally competent (ready for tasking) of carrying out an assigned mission at  particular time.

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