Decision-Making Model at Large Machine-Building Enterprises

Author Name(s): Anton N. Karamyshev
Author Email: antonkar2005@yandex.ru

Abstract

One of the ways to significantly increase the competitiveness of an industrial enterprise is to outsource its inefficient business processes. An analysis of the literature showed that the decision on outsourcing is currently based mainly on expert assessments. The use of quantitative methods for assessing the value of business processes (primarily the ABB method and its varieties) due to their shortcomings (including ignoring the cyclical nature of the economic relationships between auxiliary business processes of an enterprise) is problematic to assess the appropriateness of transferring business processes to outsourcing. In addition, the practical application of quantitative methods is complicated by the specific features of large machine-building enterprises (large and complex business processes, multiple relationships between them, a wide range of marketable products). In order to eliminate this drawback and consider the specific features of large machine-building enterprises, the author developed a methodology for multi-cycle calculation of the cost of auxiliary business processes, which is the basis for the decision model presented in the article on transferring the business process to outsourcing. The model allows economically substantiating the decision to outsource the business process by comparing the total costs of the enterprise in two situations: both without and with outsourcing the business process.

Introduction

For large industrial enterprises, one of the factors of a significant increase in competitiveness is the outsource of individual business processes and business functions. External executives (outsourcers) of outsourced business processes specialize in performing these processes and functions, which forces them to learn best practices and technologies and to perform work more efficiently and economically. Most often, outsourcing is transferred to logistics, information, accounting, personnel, security, translation, advertising functions [1], the total market for outsourcing services in Russia is about 4 billion US dollars [2]. Outsourcing of non-core and non-major functions allows the customer company (outsourcee) to focus on key business processes that create product value for the end-user.

Conclusion

A decision-making model for the outsourcing of a business process has been developed, which differs from the existing ones given the complex cyclical nature of economic relations between auxiliary business processes and the ability to assess the impact of a potential outsourcing decision on the company’s operations and its total costs.

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