Factors Affecting Supply Chain Management Efficiency in Cross Border Outsourcing - A case study of H&M and it´s Outsourcing Operations in Bangladesh

Abstract

Background: Outsourcing has been emerged as an important business and economic strategy for achieving competitive advantage to multinational companies these days. The comparative advantages of different countries and companies‟ intention to maintain increased focus on their core businesses drive them to go for offshore production sourcing their needs by utilizing an effective supply chain system. Although global outsourcing enables companies to achieve competitive advantage but the outsourcing operations is not easy to perform. Several factors are involved which ultimately affects the efficiency of the entire Supply Chain system and global outsourcing firms in different locations could face problem that make it challenging for managers. Therefore, it is important to consider these inefficiency factors while conducting outsourcing operations in Global market. Purpose The purpose of our thesis is to investigate how inefficiency factors affect the Supply Chain system of Multi National Corporations (MNC‟s) during outsourcing process. With that view we have analyzed what implications of these factors in overall efficiency in entire value chain System, how these factor affects Supply Chain efficiency and, in particular, which factors are significantly responsible for inefficiency. We will also analyze probable solutions to minimize inefficiency in Cross Border Outsourcing. Case Study We have selected the Ready Made Garments industry (RMG) of Bangladesh to investigate our problem. Ready Made Garments industry (RMG) in Bangladesh has emerged as the main export earning sector in Bangladesh and in 2008-2009 financial year 79.33% of its total export income from this sector. We have selected H&M as our case company as it has been sourcing in Bangladesh since 1981. Research Findings: Study finding shows that some factors acting as a hindrance to this smooth operation in cross boarder outsourcing. Finally we analyzed several factors and find out the potential ways to minimize the effect of these inefficiency factors and recommended some probable measures to increase overall supply chain efficiency in total value chain system.