I would like to start by saying that outsourcing is but a transfer or a delegation of some corporate operations, day-to-day operations and other activities of the outside companies, rather than to internal departments. One should remember that the customer in the case of outsourcing receives the service from the company as usually, while that company would shift things like accounting, IT or marketing to external companies. Outsourcing thus starts to be a corporate strategy rather than mere convenience. Further in the paper the use of outsourcing by Harley Davidson will be explained and shown, yet now one needs to expand on outsourcing.
Currently there are two main types of outsourcing, namely traditional and ‘Greenfield’:
1. Traditional outsourcing, is all about employees of an enterprise ceasing to perform various duties to the enterprise that they used to in the past. The company then defines these jobs and duties and uses the employees hired by the employment company to perform these jobs. For instance, the IT jobs and duties that are usually outsourced with the help of traditional outsourcing (e.g. LAN, WAN, telecoms) and are transferred to the IT centers that deal with hundreds of companies that need outsourcing. Another example can be facilities management duties that can be hired from the facilities management companies (Cherny, 34).
2. “Greenfield» outsourcing, means that the given company would remodel and alter its existing business processes in order to avoid the given duties in the company whatsoever. For instance, if a company wants to deal with some wireless or mobile communication, yet did not have any competence in that realm, might hire a start up company to fully provide this service rather than to spend millions of dollars on research and nourish internal competency.
I should note here that the majority of the outsourcing companies are based in the mainland USA, yet more and more countries (mostly European and China) become the outsourcing partners of the USA (Cullen, 15).
Offshoring on the other hand is an acronym for offshore outsourcing, or the practice of hiring the outsourcing companies and employees from different countries (rather than home country). These companies that want to lower their labor costs would hire people from foreign countries. The most common offshoring countries are India, China, Russia, Israel, Thailand, Indonesia, or Ireland (Greaver, 13).
The only difference between offshoring and outsourcing is that offshoring hires people from the outside the organization and from abroad, while outsourcing involves hiring people from the outside organization.
If we take a look at the diagram shown below we’ll see that outsourcing comprises offshoring, thus a company can:
1. Do both offshoring and outsourcing or
2. Do outsourcing.
A company cannot do offshoring without outsourcing.
Why is offshoring in the news? Because staff and contract workers in the United States see their jobs in the high-tech and IT industry disappear as their current or former employers use offshoring to reduce costs (Davies 89).
The following jobs are currently offshored most frequently (Dutta 122):
2. IT specialists
3. Consulting workers
4. Accounting people
5. (Menial labor) as a mean of moving production to abroad (Nike, Reebok, closes producers)
The implications are rather severe-I might have a difficult time finding a high-paying job in the area that is being outsourced. Furthermore, if I already have a job I might lose it once the company decides to offshore its operations.
I can make little to prevent the firms from offshoring yet at the same time should do the following:
1. Get the best education possible. Usually foreign labor is less competent. E.g. the foreign programmers usually get involved in program testing and troubleshooting rather than independent developing.
2. Know the job trends and thus remain aware of the salary levels, and demand for given positions in the USA.
1. Outsourcing/offshoring saves money for companies who outsource.
2. Outsourcing allows the company to focus on its competencies.
3. Outsourcing allows foreign companies to get the “crumbs from the table” of the US business.
4. Outsourcing contributes to the overall efficiency.
1. Outsourcing lays off people
2. Outsourcing causes stress to existing workers who are not certain of their future.
Harley Davidson Company and the use of information technology in management.
peaking about the history of the Harley-Davidson motorcycle company, I would like to say that it dates back to 1903. Back then, Bill Harley, and Arthur Walter Davidson in their backyard would develop a rather primitive one-cylinder motorcycle that made use of the gasoline engine that was introduced to the USA a few years earlier (Holmstrom, 32). The motorcycle originally was designed for racing purposes. Once they managed to sell this first motorcycle, they understood that indeed there is a strong demand for their products and made another dozen in 1905. By the year 1908 they would be making about 200 motorcycles in their wooden barn. In 1909 they already created a small company and would hire about 20 employees (Bolfert, 76). The same year, Bill Harley would utilize the existing 1000CC V-Twin engine and would create a nice motorcycle that was powered by 8 horse powers. The V-twin image of a Harley-Davidson company that we know of today was created back in 1909 to show what kind of engine this motorcycle was using. The famous ‘bar and shield’ logo is the only other image of Harley-Davidson we know of. The motorcycles were used for racing and thus were creating a better image of the company. The Harley Davidson company would keep up with all the technological updates and would be the first to introduce the F-head engine the same year it was introduced (1911) (Holmstrom, 33).
In 1912, the company would open a 6-story factory and would start its first export operations to Japan. The next year, the company would create all the motorcycles with the sidecar to stimulate the family-oriented purchases. In 1917 during the WWI, Harley Davidson would create the motorcycles for the military and would become the largest motorcycle company producing over 25,000 motorcycles a year. Yet in the 1918 Harley-Davidson would face extreme competition from the car industry, as the price of T-Ford would drastically fall because of the mass production. In 1940s Harley-Davidson would again sell to the military and would even get some patriotic award. The 1950s saw extremely competition from the British “Triumph” motorcycle yet once introduced “Sportster” of Harley-Davidson would regain the lost positions (Bolfert, 81).
Modern day Harley-Davidson Inc. personnel is concerned the motorcycle manufacturer might eliminate some jobs in the majority of its plants by outsourcing the IT department. It should be noted that traditionally, Harley-Davidson has gone out of its way to do most things in-house. And taking into account the fact that it’s oftentimes a matter of outsourcing to survive, Harley-Davidson needs to use outsourcing to effectively compete with Toyota, Honda, Kawasaki and other competitors.
Harley-Davidson currently uses the following systems: DataMirrorCorp.’s DataMirror server, which is a proprietary software similar to Microsoft SQL server. IBM Corp. AS/400, Microsoft Corp. Index Server, Microsoft Visual InterDev Web site development tool, Novell Inc. File Server 4.1 (holds fax-on-demand service information) are other IT tools that Harley-Davidson uses in its daily operations (Block, 23).
The following areas need the most attention and presents the problem area for the whole company:
a. Receivables/Payables management. Harley-Davidson, although specializes in the production of cool bikes still needs to properly manage its finances and especially accounts receivables. In years 1999-2002, Harley-Davidson had the largest bad debt receivables in the motorcycle industry. Outsourcing might certainly work for the company. Just like the receivables, Harley-Davidson, faced several difficulties of managing is payables and oftentimes would forgo the opportunities as provided by terms 10 days 3% discount, 30days 1.5% discount, 60 days due (Treacy, 90).
b. Payroll. Harley-Davidson, in the past incurred problems of paying the employees that already left the company or faced payroll fraud of paying to the non-existent employees.
c. Extranet, called h-dnet.com, is the outsourced Harley-Davidson extranet system that allows the Harley Davidson distributors to file warranty claims, check recall status and submit financial statements. The system will also be used to order parts and accessories from the producers and affiliates of Harley Davidson. All of the Harley Davison hard-core transactions, that were previously available only to dealers who used client/server systems that could talk to Harley-Davidson headquarters, utilize Web browser. Harley Davidson dealers are able to search for «soft» data–anything from exploded-view Harley Davidson engine diagrams to executive press releases aimed at investors. The sad thing is that this system is very slow, and usually it takes Harley Davidson weeks to answer emails from suppliers or distributors (Block, 29).
B. Analysis and Evaluation.
1. According to the text, the first problem can be analyzed using either internal audit or the external help from one of the big five or smaller audit companies that provide financial consulting (Gilmore, 120).
2. According to class lecture, the second problem can be addressed using a special payroll outsourcing firm as well as internal audit/external consulting.
3. Based on the information shown above, the third problem really means that Harley Davidson does not posses enough of the competent sales staff/ processing staff that would process the emails/enquiries, answer questions and if needed contact the competent staff in the company for the needed information.
1. For the first problem Harley Davidson should use internal audit to assure that the receivables and payables alike are properly recorded, authorized, and the finances are properly processed. Historically companies managed their receivables and payables on their own, thus it would be a mistake to outsource this process to other companies. The role of the IT department is to create reminders that would pop up once the person delayed the payment (send him/her first reminder, second reminder, third reminder, if needed sue the person). Once the person paid, assure that the money is received, and receivables are recorded and the person is crossed out of the receivables list. The payables should be done in a timely manner, with the IT system not only reminding when the check should be sent to the suppliers, but also to calculate how much the company wins or loses by paying on time.
2. For the second problem, this company can use the payroll services firm and eliminate a great number of unneeded personnel, which must be properly kept separated in accordance with the ARC (authorization, recording, custody) principle. The simplest way is to open the white pages and hire the existing payroll firm. The Harley-Davidson will need to occasionally send the needed amount to the account the firm will specify, while the outsourcing firm will be able to process, contact the employees, give away checks, etc., by itself.
3. A solution for the third problem might be proper management and separation of labor. The IT technology should assure that the enquiries are distributed to different people based on different topics. Thus, one person should concentrate fully on customer emails, while another person should always speak with the distributors of Harleys or company’s suppliers. Another person should serve as a middle link between the IT department and the sales personnel, and should any requests to modernize the system appear, he/she would be able to pass on the message and obtain the results quickly. Another person should be a link between the sales personnel and the Harley’s management to answer more complex questions. In this case each person would be able to concentrate on a given task and thus become more productive, while the system would become faster.