Hammaker Manufacturing: Re-engineer or Outsource

Implementation of a new AIS went smoothly, for the most part. It is 15 years later, and now HMC is interested in mapping a variety of their business processes to determine whether improvements can be made and whether business process reengineering should be considered. Hammaker asked Denise to work with the consulting firm analysts to determine the feasibility of these two options and also to consider the possibility of outsourcing. Denise does not know much about outsourcing and she is not sure which process (or processes) D might want to outsource.

Denise discovers that a number of developing countries have the capacity and the labor to make the parts that HMC is currently producing and at much cheaper prices. Further, Denise discovers that many companies are outsourcing and offshoring a number of processes that used to be accomplished by company employees. Denise makes a note to herself to check the number of employees in each of the following departments: HR, computer support, accounting, and janitorial services. She also decides to query the AIS to determine what performance measures are available to assess the efficiency and effectiveness of each of these departments. Denise places a call to Lloyd Rowland to discuss this issue with him.

HMC is not unionized, but Denise ponders the legal and social issues associated with outsourcing jobs, since many of the 365 employees at Hammaker Manufacturing have been with the company for well over a decade.

Requirements

1. Identify tools that would help Denise and Rowland map HMCs business processes. Which processes do you think they should work on first? Why those processes?

2. Identify at least six reasons why companies choose to outsource a business process. Which of these reasons might D use to make his decision to outsource or to attempt BPR?

3. Is producing automotive parts a core business process for Hammaker manufacturing? Explain.

4. Do companies ever outsource core business processes? Search the Internet to see if you can find an example of a company or an industry that outsources core business processes. What are they? Why are they doing this?

5. What social or legal issues might Denise consider? Be specific and explain why these issues might be important to Hammaker manufacturing.

6. What would you recommend if you were one of the analysts at the consulting firm? Explain.