Microsoft and Outsourcing to Flextronics essays

Microsoft and Outsourcing to Flextronics essays (1) Microsoft's decision to outsource their Xbox production to Flextronics, a Singapore based company, was based on several variables. Microsoft is primarily a software company and had a small hand in producing hardware, such as joysticks, computer mice, keyboards, etc. When Microsoft came into the video game industry, they decided that they lacked the manufacturing and logistics capabilities to make the Xbox and manage a global supply chain [1]. Microsoft had chosen to outsource to Flextronics for several reasons. Flextronics could lower costs in production for Microsoft because they were able to tightly manage its supply chain, therefore reducing the chances of supply chain disruption, which can be costly [1]. Not only was Flextronics efficient in supply chain management they had an "industrial park" strategy that Microsoft and many other electronic manufacturers didn't have. Flextronics required that key suppliers locate their factories next to Flextronics assembly plants in lo w-cost areas. Flextronics had industrial parks in Brazil, China, Hungary, Mexico, and Poland. This global presence that Flextronics had is exactly what Microsoft was looking for. With these "industrial parks" located throughout various locations in the world, Flextronics would be able to shift production from one plant to another as demand conditions warranted [1]. Additionally, Flextronics and Microsoft used an advanced Web-based information system that it used to communicate with each other on a real time basis. This was pertinent to reducing errors and relaying information quickly to one another to ensure and facilitate expedient production of Xbox consoles where inventory is low, to avoid any shortages. Finally, Microsoft had a long standing relationship with Flextronics. Microsoft had used Flextronics for years to produce their small hardware (computer mice, joysticks, etc.) and trusted them. Microsoft trusted that Flextronics would be able to bu...