An outsourcing framework: action research in the heavy industry sector

Abstract

Recent literature suggests that outsourcing, properly understood and managed as an integral part of strategy, can aid competitiveness. This paper examines the process of outsourcing manufacturing to understand its role in the new strategic agenda. A system model which indicates the critical workflow interfaces between the production system and internal support functions is proposed. The model helps determine the cross-functional interdependencies of the outsourcing process. A four-phase model of strategic outsourcing is then developed. The model serves both as an internal management tool and as an external marketing tool. This leads to synthesis of a practical framework that links six generic phases of outsourcing to strategic planning. The framework includes key activities with built-in performance measures and expected output for each of the phases. The research methodology combines theory study with case study and action research in Aalborg Industries, which operates in the heavy industry. Hence, the research pursues both academic and industrial application.