Re: Internal Customers & Incentives LO1352

Dr. Ivan Blanco (BLANCO@BU4090.BARRY.EDU)
Mon, 22 May 1995 14:55:25 -0400 (EDT)

Replying to LO1327 --

> Date: Sat, 20 May 1995 14:04:02 -0400
> From:

... some stuff deleted here ...
> And if we do allow choice and people do go outside, then why do we have
> these incompetents inhouse? It is indeed survival of the fittest and
> people are scrambling to improve to keep their jobs.
> The fallacy I see with the logic of the marketplace is that outsourcing
> certain functions also implies the loss of certain control. We do things
> in our organization based on certain values "the company way" so to speak.
> Other organizations might get the same job done more cheaply and
> efficiently, but perhaps not in a way congruent with our values, and this
> involvement then might detract from the success of the organization to
> achieve its overall mission.
> This idea of allowing a choice for internal customers over the provider is
> intriquing and pokes at the issue of incentives and also leads to issues
> of differentiation, autonomy, and empowerment.
> --
> David Markham

There is a contradiction here. You ask the question of Why to
have these incompetents in house? and, at the same time, you say that
outsourcing represents the "loss of certain control." I don't think that
that one can lose what one does not have! When we have internal units
serving us and we can not demand higher level of quality on the
material/equipement/service they provide, then we really don't have any
control over them! When we outsource, then we become "true" customers of
the supplier and can demand better quality and service, or go to someone
else who can. I would say that, unless we can demand and receive very
high levels of quality and service from our internal units, we have more
control and influence over external suppliers.

I would say that the "comapny way" is more appropriate for those
units, processes which interact directly with the customers. Everything
else should be considered as a good candidate for outsouorcing! I am not
saying that all of them should, but there is no reason for a company to
accept lower quality components, just because they are done/manufactured


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