- The Outsourcing Process - What is the Vendor’s Way?
- Zoran Perunovic (Technical University of Denmark, Denmark); Mads Christoffersen (Technical University of Denmark, Denmark); Howard Williams (University of Strathclyde, United Kingdom)
The outsourcing phenomenon has been increasingly receiving attention both from academic and practitioners communities; the focus of much of this research has been concentrated on understanding whether and what companies should outsource. The result of the research has lead towards the emergence of several process frameworks depicting the phases of the outsourcing process. It is commonly recognised that the outsourcing process consists of the preparation, vendor(s) selection, transition, management of relationship, and reconsideration phases. Each of the phases has been broke down in the serious of activities that an outsourcing company performs. At the same time, the phases received a flow of theoretical explanations. The outsourcing process seen from the outsourcer’s perspective seems to be relatively well understood.
However, the outsourcing process involves engagement and interaction of minimum two organisations – the outsourcer and the vendor. Ironically, despite the research on the outsourcing process there is very little understanding of the issues from the vendor’s perspective. This shortcoming is a motivator for this paper.
In the proposed paper the authors focus on the outsourcing process as seen by the vendors. A literature study method is used to frame the phases of the outsourcing process and describe the activities embedded in each of the phases. The vendor’s side of the outsourcing dyad is explained through existing body of knowledge that is related to the vendor’s value proposition. The authors then set those two perspectives against each other. This cross examination enables us to identify gaps in understanding the vendor’s way in the outsourcing process. The paper concludes by posing some research questions and propositions to motivate the vendor’s perspective research agenda in the outsourcing process.
- Technology Management Challenges for a Sub-Supplier in the Aerospace Industry
- Ulf Högman (Chalmers University of Technology, Sweden); Fredrik Berglund (Chalmers University of Technology, Sweden)
Customers of the aerospace company studied act primarily as system integrators today. This means that the company studied is expected to take full responsibility for a component or sub-system, including developing new innovative technologies within their specializations. For a supplier, the global trends and general expectations of the industry may be reasonably clear, but how this should be translated to technology development is not necessarily a clear-cut process. This includes anticipating market trends, how the customers of the company are positioning themselves in relation to global trends and regulations, the overarching system architecture that could be chosen by an aircraft supplier, and various forms of possible collaboration driven by market forces and political arrangements. The difficulties for a company acting as a sub-supplier under these uncertain circumstances, to propose a logical and solid technology strategy are obviously not easily managed. This paper reports a case study on how selected aspects of technology management interact and how they shape the development and decision making processes within a particular company acting as component supplier in the aerospace sector.
To explore the management of technology, focus group interviews were used. A total of seven groups were interviewed for approximately two hours each. For the composition of these groups, a purposeful homogeneous sampling strategy was chosen to find the people with the greatest insight on this topic and to focus on the variation in perspectives of internal organizations. The interviews were recorded and transcribed, informal methods for data reduction were used to condense the material, and the results and conclusions were presented to the participants and other interested parties at the company to improve clarity and eliminate error.
The study explores a process of technology maturation and implementation. Experience gained from aspects such as identification, selection, planning, execution and introduction of new technology was discussed. The overall vision of the general management is translated into requirements and goals for new technology. This process is highly cross functional, with different organizational groups contributing in various ways to develop the technology. Functional aspects of technology development are an intricate part of the study; differing views on the advantages and disadvantages of current work practices are outlined.
- Transforming the Manufacturing Base of the West: The TRANSFORM Model
- Carl Chang (State University of New York at Buffalo, USA)
Global outsourcing from the West to low-wage countries has been known to have focused primarily on low- and medium-value manufactured goods (e.g., shoes, toys, textile products, PCs, and home appliances). Some business executives now predict that in a not too distant future automobiles made in China and India are to be marketed to the US and other developed countries. The drive of low- wage countries to constantly advance their technological sophistication is clearly both evident and anticipated. If this trend is allowed to continue unabated, more industrial sectors of the West will suffer and the overall manufacturing base of the West will steadily decline. Are there ways to strengthen some manufacturing sectors of the West to slow down this erosion?
This paper suggests a model, the TRANSFORM model, to selectively strengthen the high- value segment of the manufacturing base of the West. The model emphasizes nine specific strategies: (1) Triple our efforts in practicing the systematic methods of mining deep smarts;(2) Revisit and explore applicable literature to relentlessly obtain tacit personal knowledge, in addition to gathering explicit knowledge; (3) Acquire new insights by constantly reviewing, testing and modifying existing concepts, patterns, scenarios and knowledge rules; (4) Nurture innovative ideas through interactions in group settings by means of reviewing, sorting, grouping, experimenting, matching and integrating divergent and seemingly unrelated concepts, patterns and scenarios; (5) Select reasonable conceptual elements to steadily synthesize, reshape and improve; (6) Formulate inventive concepts for further testing and refinement;(7) Orient the innovative efforts to focus on developing novel manufacturing technologies and specialized production methodologies; (8) Refine and apply the supply chain strategies to facilitate the use of special manufacturing technologies in producing high-value goods in order to achieve economies of scope advantages;(9) Maintain a steady advancement of the distributed manufacturing base of the West, while realizing marketplace advantages in cycle time, product feature and competitiveness.
This model emphasizes the application of innovations to transform the manufacture base of the West by selectively developing its high-value segments. The example of the Boeing 787 Dreamliner is discussed to demonstrate the technical feasibility of putting together a sophisticated product with premium features in an optimized way by relying only on the skills and manufacturing capabilities of the West.
As the West emphasizes the creation of customizable products with premium features and innovative manufacturing technologies, a dynamic equilibrium will be maintained; these new and advanced manufacturing technologies will feed into the leading edge of a “pipeline,” whereas the standardized and commoditized ones for making low and medium-value products will flow down the pipe and be applied by many low-wage manufacturers. By the time the world would see advanced airplanes of the787-type being made in China, India and other developing countries, the West should have been in a position to offer even newer and much more sophisticated products. It is within this dynamic equilibrium that the West would be able to maintain and expand its current lead in high-value manufacturing by applying the TRANSFORM model.
- Effective designer-manufacturer sharing of information to reduce quality problem
- Atsushi Aoyama (Ritsumeikan University, Japan)
The focus of the work is the effective use and management of information to reduce the quality problem, thereby improving industrial competitiveness. This research has addressed the problems of assisting the product through the provision of advanced manufacturing-related information and of supporting the manufacturing engineer with information derived from the design stage. The business environments surrounding the global manufacturing industries are undergoing tremendous changes. With the increasingly free flow of capital, technology and human resources, the manufacturing industries in developing countries are rapidly expanding. They have huge cost advantages due to large production capacity and low labour cost. In response to the ever more severe global competition, the Japanese manufacturers are intensifying their effort to cut the manufacturing cost by implementing the following measures: establishing overseas manufacturing facilities, employing unskilled laborer instead of skilled laborer at the production line, outsourcing part of manufacturing process to overseas fabricators. However, the Japanese manufacturers start to experience number of quality problems that has never been a major concern before. These quality problems includes: increasing number of defective products, longer lead time from completion of product design to commencement of manufacturing, unmanufacturable or hard-to-manufacture product design.
Preliminary investigation has indicated that those quality problems are caused by lack of appropriate and adequate information sharing between product designers and manufacturing engineer. Before the implementation of cost cutting measures, product designer and manufacturing engineer are working in close tie geographically and organizationally, manufacturing engineer generally had a profound knowledge about their products and informally feedback manufacturability information to product designer. Since this informal and implicit information sharing has been lost, more formal information sharing scheme has to be established. An appropriate information transformation is also necessary to enable mutual understandings. Therefore we set the purpose of research as to conceptualize, design and implement information transformation and sharing scheme between product designer and manufacturing engineer to improve production quality. Firstly, a quality management diagram to relate the lack of information and the quality problem is developed. The lack of information is categorised by the places where necessary information is lack (design or manufacture), the contents of lacking information and the necessary means of information transmission to complement lacking information. The quality problems occurring at a real manufacturing facility are analysed and classified into four categories: product defection, longer lead time, unmanufacturable product design, and complex manufacturing process. These categorised quality problems are related to the lack of information. Secondly, the reasons of lacking information are extracted, analysed and classified into primary, secondary and tertiary factors. As a preliminary trial to prove the effectiveness of information sharing and transformation, an information transformation system to convert the design relevant information generated by product design activities into the manufacturing relevant information has been implemented at a xenon lamp manufacturing line. The product defect is reduced by half at this trial although the only two kinds of information are supplemented. This research is going to be expanded to develop comprehensive information transmission and transformation system between product designer and manufacturing engineer.
- The Analysis of the Bipolarization of Profitability amongst Japanese High-technology Firms
- Koji Moriyama (Tokyo Institute of Technology, Japan); Chihiro Watanabe (Tokyo Institute of Technology, Japan)
Contrary to the homogeneous behavior with a traditional R&D intensity-oriented R&D strategy that enabled a high-technology miracle in the 1980s, Japan’s leading high-technology firms now demonstrate contrasting behavior, including (i) bipolarization between high-performance firms and stagnating ones, (ii) a clear contrast between a conspicuously high-level of R&D input and extremely low level of output, (iii) a?subsequent dramatic decline in the profitability of R&D, (iv) a contrast between vigorous external learning and clinging to the not invented here (NIH) syndrome, and (v) bipolarization of firm globalization.
These observations prompt us the following hypotheses with respect to a survival strategy for high-technology firms toward a post-information society:
(i) The substitution of a R&D output-oriented strategy for a R&D input-oriented strategy is indispensable,
(ii) Shifting from an internal generation strategy to external acquisition efforts is essential for this substitution, and
(iii) Such a shift is transforming Japan’s traditional technopreneurial structure, resulting in bipolarization of Japan’s leading firms having a homogeneous structure.
Given the significance of such a bipolarization in innovation inducement and consequent global competitiveness structure, this paper attempts to demonstrate the foregoing hypotheses. Important implications obtained include : (i) in terms of correspondence to the transition to a post-information society, a bipolarization structure can be clearly observed in Japan’s leading high-technology firms, (ii) this provides a significant impact on global competitiveness, (iii) substitution from R&D intensity to operating income to R&D is indispensable for competition, (iv) shifting from internal generation of innovation to external acquisition efforts is essential, and, thus (v) constructing a co-evolutionary dynamism between heterogeneous firms is critical.