Trade Offs For Productivity Improvements Essay

Trade Offs For Productivity Improvements Essay

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Outsourcing occurs when products or services are obtained by an outside supplier (Vonderembse & White, 2013). Companies may decide to outsource if it can be obtained less expensively due to specialization or the other company may have proprietary technology that gives them a competitive advantage (Vonderembse & White, 2013). This paper will analyze trade-offs for productivity improvements, discuss both the advantages and disadvantages of global sourcing versus producing in the United States, recommend a low labor cost country based on inputs, trade-offs and global advantages and give an example of a product of the specific country.
II. Productivity
Productivity inputs are labor, internally and externally; capital for land, facilities, and equipment; and materials (Vonderembse & White, 2013). The outputs vary based on business type and the products being measured. When improving productivity a company can trade off certain inputs to increase it. Trade-offs of productivity can include trading capital for labor, trading capitals for material or energy, substituting materials for labor, and improving productivity through better maintenance.
Trading capital for labor requires a company to increase capital that will cut down labor hours on a specific product. For example in grocery stores people can use self checkout which allows the guests to scan and bag their purchase this eliminates staff members from actually running the cash registers and allows them to be utilized in other places or cut hours (Vonderembse & White, 2013). Capital can also be traded for materials or energy. This is a company making a capital investment that improves material and energy productivity (Vonderembse & White, 2013). If a company invests in equipme...


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...he United States (Chenn, 2012). The average wage in 2010 in China for this position is averagely $2.00 while the average labor cost for this position in America was $34.75 (Chen, 2012). Apple like other technology companies have decided to outsource their products to China because of consumers, as a consumer people seek a high return on investment (Chen, 2012).
Companies face decision daily including increasing productivity by performing trade-offs and even outsourcing. It is all about the company being able to produce quality products while making a profit. This paper analyzed trade-offs for productivity improvements, discussed both the advantages and disadvantages of global sourcing versus producing in the United States, recommended a low labor cost country based on inputs, trade-offs and global advantages and gave an example of a product of the specific country.

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