Outsourcing Strategy Research Articles

Strategic logistics outsourcing: An integrated QFD and fuzzy AHP approach

This paper develops an integrated approach, combining quality function deployment (QFD), fuzzy set theory, and analytic hierarchy process (AHP) approach, to evaluate and select the optimal third-party logistics service providers (3PLs). In the approach, multiple evaluating criteria are derived from the requirements of company stakeholders using a series of house of quality (HOQ). The importance of evaluating criteria is prioritized with respect to the degree of achieving the stakeholder requirements using fuzzy AHP. Based on the ranked criteria, alternative 3PLs are evaluated and compared with each other using fuzzy AHP again to make an optimal selection. The effectiveness of proposed approach is demonstrated by applying it to a Hong Kong based enterprise that supplies hard disk components. The proposed integrated approach outperforms the existing approaches because the outsourcing strategy and 3PLs selection are derived from the corporate/business strategy.

Risks and Benefits of Outsourcing Hotel Operations: A Comparison between Scotland and Taiwan

This paper examines the use of outsourcing in the activities comprising hotel operations in Scotland and Taiwan. Outsourcing is a key process integrated into the design of the supply chain management. The research also focuses on empirically identifying the role of the outsourcing strategy in hotels. To this end, the authors propose two hypotheses to study the relationship between the benefits and risks of outsourcing and the tendency to use third-party organizations. These hypotheses are analysed and tested in the two regions. The study was conducted on a representative sample of 118 hotels in Scotland and Taiwan. A questionnaire was used to obtain the findings. The results indicate that the principal candidates for outsourcing are the activities requiring technical skills and those services not involving direct contact with guests. No significant differences were found between the current levels of outsourcing in Scottish and Taiwanese hotels. The findings indicate that a stronger perception of the risks and benefits of outsourcing has a greater influence on outsourcing strategy. Furthermore, in the case of Scottish hotels, it is the benefits that determine the level of outsourcing, while it is the risks that do so in Taiwanese hotels. This work contributes to the literature on outsourcing from a services perspective.

A system dynamics model for studying manufacturing outsourcing cost dynamics

Historically companies considered outsourcing manufacturing operations to low-labour-cost regions as a winning formula to effectively compete domestically and globally. However, in the long run, outsourcing strategies may not always be beneficial. Economic growth in developing countries tends to raise labour wages. Increasing global demand for raw materials tends to increase their cost. Added to this, long distance suppliers may prolong lead time, build inventory levels, and reduce responsiveness to demand. To understand how various factors evolve and work together over time to influence the cost-benefit balance in outsourcing, this study presents a system dynamics model of manufacturing outsourcing. This model can map out a supplier’s response to changes in demand and provide insights into how the behaviour of various cost elements changes over time. Outsourcers can use this model to evaluate potential suppliers and formulate outsourcing policies that can ensure sustained profitability.

Outsourcing in Healthcare through Process Modularization – A Lean Perspective

Looking for efficiency, quality and profitability gains, healthcare organizations are adopting outsourcing solutions in the attempt of “doing more with less”. Seeking for cost reduction, risk mitigation, adapting to quick changes without compromising internal resources, these organizations also take big risks in control and flexibility variables. In order to understand how healthcare organizations find the best value equation combining internal and external resources in a modular service conception, a case study on a start-up Long-term Care unit with innovative format, great levels of customization and following an outsourcing strategy, was carried out.The main conclusion, among others, is that in ambitious start-ups, having speed of entrance as the conditioning factor, a process orientation and management approach may offer a clear view of the gains related with trade-off decisions regarding time and cost (agility) and cost and quality (Leanness) ie, decisions under the “leagile” paradigm.This study contributes for a wider understanding of the “leagile” concept associated to an outsourcing operational strategy. Additionally, it also provides new insights to the concept of modularity in services settings in a complex service as healthcare.

Consent and content: effects of value chain restructuring on work and conflict in highly skilled workforces

Examinations of the effects of globally distributed work and the creation of new international divisions of labour often focus on quantifiable or structural issues such as challenges to the employment relationship, formal working conditions, contracts, working time, or wage regulation. However, the content of work, however, may also be affected by the restructuring of value chains; but this is difficult to track and to regulate, and may have both objective and subjective dimensions. This paper addresses these issues, drawing on 58 case studies of four different economic sectors in 13 European countries as well an international study on multinational strategies of outsourcing and offshoring to India and China. It analyses the processes leading to segmentation and fragmentation and looks at how employees' consent is obtained for these changes and explanations for the extent to which workers accept the changes brought about by value chain restructuring or find ways to resist them.

The impact of outsourcing strategies on companies’ intellectual capital

The aim of the paper is to analyse the effect of outsourcing on the intellectual capital of firms in the current turbulent environment. In particular, the paper will analyse the difference between cost-driven and strategic-driven outsourcing and their impact on human and organisational/relational capital. In addition, the paper will stress the differences in outsourcing of manufacturing and service firms. We propose an approach of literature review in order to develop a model of outsourcing for enhanced intellectual capital utilisation and competitiveness. This methodology puts in evidence that there are very few studies/analysis that stress the link between strategic outsourcing and its potential to increase in particular relational capital due to cooperation of two or more firms. The outcomes of the application will result in a theoretical model that can assist researchers, managers and consultants to better understand the link between outsourcing and intellectual capital and competitive advantage.

Collaboration Versus Outsourcing: The Need to Think Outside the Box

As has been widely reviewed elsewhere, the pharmaceutical industry is experiencing an 'innovation deficit' as evidenced by the decline in new chemical entity output. This decline, compounded by increased costs and regulatory requirements highlights the need to significantly revise strategic options across the drug-discovery spectrum. Within such revision(s), much of the focus has been on outsourcing to reduce, or at least contain, costs, but if the underlying predominance of 'closed collaborations' is not challenged to allow better use of combined knowledge and, thus, move towards a more genuine collaborative process then a 'numbers only' approach will not bring medium-to-long-term survival. There are many problems to confront in evolving new sustainable strategies, a real need to think differently exists and should to be cultivated. This article reviews current outsourcing and collaboration strategies to provide a perspective on how great knowledge sharing could help revise the drug-discovery process.

공공도서관 민간위탁 해외 사례 비교 연구

AbstractThere are lot of arguments whether it is necessary to outsource public libraries in Korea. What are the impacts of outsourcing public libraries? Is it efficient and productive? How is the publicness of public libraries maintained after outsourcing? This article studies public library outsourcing in the U.S, England, Germany, and Japan, and finds implications for Korea. The results of this comparative study show that outsourcing public libraries is not common in many countries. However the number of outsourcing is slowly increasing. Public library outsourcing does not always enhance productivity and publicness. Outsourcing public libraries is only one of the various managing systems of public libraries, and each county has its own unique library management system. Korea should also develop its own outsourcing policies and strategies regarding public libraries to attain their productivity and publicness. ■ keyword : ∣Public Library∣Outsourcing∣Productivity∣Comparative Study ∣ * 본 연구의 일부 자료는 문화체육관광부에서 지원하여 한국행정연구원에서 생산된 자료를 활용하였으며, 지원기관의 허가 및 한국행정연구원 연구자료관리규칙에 의거 사용허가를 받았음접수번호 : #110727-004접수일자 : 2011년 07월 27일심사완료일 : 20111년 09월 19일교신저자 : 최성락, e-.mail : haihabar@gmail.com

The alignment between organizational control mechanisms and outsourcing strategies: A commentary essay

How to achieve superior performance through outsourcing activities is a critical issue for multinational corporations (MNCs). The paper “Alignment organizational control practices with competitive outsourcing performance” increases our understanding of how control mechanisms can be aligned with outsourcing strategies to achieve superior outsourcing outcomes. This commentary addresses the theoretical contributions made by this paper, as well as important practical implications, empirical limitations, and meaningful extensions of the study.

A STRATEGIC DECISION FRAMEWORK FOR INNOVATION OUTSOURCING

This article gives a general decision framework for companies outsourcing strategic decisions. The authors argue that a consistent outsourcing strategy, strategic evaluation and searching of external sources, and effective implementation processes are three essential steps toward successful innovation outsourcing. The article points out that outsourcing strategy is embedded in a company's overall technology strategy, and analyzes the decision context of the sourcing strategy. The new theoretical idea is the portfolio view of outsourcing strategy. The soul of innovation outsourcing should be a mix of different external sources and different levels of integration and a match with the proper organizational structure. Examples of generic portfolios are given at the end of the article.

Study on Two- echelon Centralized Inventory Management Based on Supply Chain

The research of multi-echelon inventory started by Clark and Scarf in 1960, they point that the optimum inventory management strategy is maximum ordering strategy. Since then, many researches of inventory management based on supply chain are done, they can be summarized and separated into the following kinds: (1) Production -Inventory System. (2) Inventory-distribution system. (3) Production-Inventorydistribution system. (4) Inventory distribution. Based on the article’s characteristic and demand from downstream of the supply chain, the inventory management is studied from the angles of raw material inventory and finished goods inventory by using inventory and centralized inventory theory. There are two ways of multiechelon inventory management, they are decentralized inventory strategy and centralized inventory strategy. Decentralized inventory strategy aims ultimately at inventory optimization of single enterprise or sector, it is usually secondary to the overall optimization of the whole supply chain. Centralized inventory strategy takes the link among all inventory control parameters into consideration, and then the integrated optimization of the whole supply chain can be achieved. Reference researches centralized inventory strategy, game inventory strategy and outsourcing strategy from the aspect of manufacturer, and finds the optimal level and applications of each strategy. References multiechelon inventory with a center warehouse. A inventory management model is built in order to make the optimize inventory management strategy of centralized inventory. References research SPP problem based on price discount, it supposes that order quantity and the practical demand are known. Through empirical analysis, this paper proves that it is practical to optimize order quantity and price by joint decision strategy. These researches are based on multi-echelon inventory theory of supply chain and manage inventory through joint strategy. These researches adopt the same inventory strategy in all kinds of inventory without considering the different needs in different situation, so they aren’t confirm with the actual production. As to this problem, this paper researches the two-echelon inventory in different

Risk management models for supply chain: a scenario analysis of outsourcing to China

PurposeA key process involved in supply chains is a priori evaluation of potential partners, not only in terms of expected cost (which includes exchange rate risk), but also in terms of other risks. These risks can include product failure, producing company failure (such as bankruptcy), and even political risk. This paper aims to compare tools to aid supply chain organizations in measuring, evaluating, and assessing risk in this environment.Design/methodology/approachThe authors demonstrate the use of DEA, followed by a DEA simulation model and also a Monte Carlo simulation using a risk‐adjusted cost concept. Once non‐dominated partners are identified by DEA, simulation analysis is applied to compare expected performance of vendors, and the range of expected outcomes can be identified, aiding supply chain core organizations to better select producing partners.FindingsThe authors consider strategies of outsourcing to China, as well as other nations under various forms of risk. A scenario analysis using risk management models indicates outsourcing to Great China is a good strategy.Originality/valueThe authors conducted a thorough review of supply chain risk management and identified criteria and various risk performance measures for outsourcing under risk and uncertainty in a supply chain. The benefit of outsourcing to China is discussed. The authors have designed an international outsourcing problem, where foreign exchange risk, product failure, organizational failure, and political risks are considered.

Managing production outsourcing risks in China's apparel industry: a case study of two apparel retailers

PurposeThis paper aims to examine how Chinese apparel retailers manage their production outsourcing risks and why they elect to manage those risks in a particular manner.Design/methodology/approachThe investigation used the case study approach to explore factors driving two Chinese apparel retailers operating in different market environments to manage their production outsourcing risks.FindingsThe selection of production outsourcing risk management strategies hinges on what apparel retailers view as the most important value their products provide to customers. Product values were linked to specific product characteristics as well as the market environment in which the apparel retailers operated. The retailer that regarded product quality as a key value driver was found to place emphasis on manufacturer selection and use of a formal contract for process control. The retailer that viewed newness and variety as a value driver opted to cultivate a strong, committed business relationship based on Guanxi to achieve speed‐to‐market.Research limitations/implicationsAs a case study research, the findings of this study have their limitations in generalisability. Given that one of the retailers did not invoke Guanxi to cultivate a long‐term business relationship with its outsourced manufacturers, the role of Guanxi in outsourcing risk management in China deserves further exploration, as businesses in China become more globalised.Practical implications/valueThis study grounds mainstream outsourcing strategy literature on operational practice through case studies. It highlights the influence of both product characteristics and market environment in dictating the choice of outsourcing risk management strategies in apparel manufacturing.Originality/valueThe study views outsourcing risk management from the perspective of minimizing outsourcing failures, rather than achieving outsourcing success. It reveals that risk management behavior of apparel retailers was linked to the notion of value protection, which varied according to what they considered as their principal product value drivers.

Aligning organizational control practices with competitive outsourcing performance

The aim of this article is to present a research model that defines how different outsourcing strategies influence organizational control mechanisms that impact outsourcing outcomes. This research study consists of five case studies, each focusing on a foreign multi-national corporation (MNC) that has outsourcing experience in China. The results of these case studies examine the relationships among outsourcing strategies, organizational control, and outsourcing performance outcomes. In addition, the findings explain how trust competence and in-house knowledge of outsourced tasks have moderating effects between outsourcing strategies and process control. This article provides practical insight into the ways that business executives exercise organizational control in order to achieve effective outsourcing outcomes within China's evolving economic context.

An Empirical Study on the Performance of Logistics Outsourcing Strategy in China

An Empirical Study on the Performance of Logistics Outsourcing Strategy in China

Selecting Outsourcing Strategies in Single Level Bidirectional Service Supply Chain: A Proposed Approach

The purpose of this paper is to propose an approach for selecting outsourcing strategies in single level bidirectional service supply chain. For this purpose, analytic hierarchy process (AHP) technique has been used for selecting two factors that have maximum influence on service outsourcing decisions. Selected factors have been integrated with quadrant analysis for selecting outsourcing strategies. Two questionnaires have been developed to indicate the importance and correlation of objectives of outsourcing and choosing factors that have influence on service outsourcing decisions in the selected service supply chain of a hospital in Isfahan, Iran. Questionnaires have been fulfilled by senior managers and supervisors the hospital. The results indicate that customer contact and relative capability position in the process have maximum affect on service outsourcing decisions in the selected service supply chain and when relative capability position in the process is high, it is better for the decision makers to keep process internal, i.e. in-sourcing since it provides more competitive advantages. Key words: Outsourcing; Service Supply Chain Management (SSCM); Health care; AHP; Quadrant Analysis

Contributors

Contributors

International R&D service outsourcing by technology-intensive firms: Whether and where?

Abstract We combine the streams of literature on outsourcing and offshoring to investigate (1) whether choosing an R&D offshore outsourcing strategy by technological firms is advisable, and (2) where these firms are more likely to allocate these R&D services outsourcing agreements offshore, namely, in developed or developing economies. Using original survey data from European and U.S. firms in technology-intensive industries, we place especial emphasis on the fact that certain firm-specific capabilities, such as technological and international expertise, are required in order to outsource R&D overseas, especially when offshoring to developing economies, as transaction costs are still the main deterrent to outsource offshore to these regions. In addition, our results also show that in the specific case of R&D services outsourcing, knowledge-seeking objectives lead to outsource to developed economies.

The costs and benefits of memory conformity

We examined the influence of external recommendations on memory attributions. In two experiments, participants were led to believe that they were viewing the responses of two prior students to the same memoranda they were currently judging. However, they were not informed of the reliability of these fictive sources of cues or provided with performance feedback as testing proceeded. Experiment 1 demonstrated improvement in the presence of reliable source cues (75% valid), as compared to uncued recognition, whereas performance was unaltered in the presence of random cues provided by an unreliable source (50% valid). Critically, participants did not ignore the unreliable source, but instead appeared to restrict cue use from both sources to low-confidence trials on which internal evidence was highly unreliable. Experiment 2 demonstrated that participants continued to treat an unreliable source as potentially informative even when it was predominantly incorrect (25% valid), highlighting severe limitations in the ability to adequately discount unreliable or deceptive sources of memory cues. Thus, under anonymous source conditions, observers appear to use a low-confidence outsourcing strategy, wherein they restrict reliance on external cues to situations of low confidence.

Strategic outsourcing investment in high technology industry

In a highly competitive industry, especially high-tech industry, a firm needs to have appropriate outsourcing strategies in order to survive. However, a firm used to have a strategic dilemma between supplier-oriented strategy and production-oriented strategy. Because of increasing complexity in the socio-economic surroundings along with rapidly changing technologies, how to have a suitable outsourcing investment is becoming an important focus for companies. However, there is no such a research in previous literatures. In order to fill the vacancy, the paper tries to briefly discuss the mechanisms of strategic outsourcing investment, its critical success criteria, and then introduce different evaluation models to help in having suitable outsourcing investment. Finally, the paper finds that an analytic network process (ANP) associated with benefits, opportunities, costs and risks (BOCR), is optimal to help companies to select the most suitable outsourcing investment projects. Key words: Analytic Network Process (ANP), Benefits, Opportunities, Costs and Risks (BOCR), strategic outsourcing investment.