Outsourcing decisions and the purchasing process: a systems-oriented approach

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Abstract:

Purpose ‐ To propose a framework for purchasing and outsourcing decisions together with a process model for evaluating and assessing possible suppliers. The paper focuses in particular on the "planning" and "qualifying" phases of the process which, respectively, set the criteria and prepare a shortlist for invitations, before the final selection. Design/methodology/approach ‐ By reference to the literature, past experience and a priori reasoning, a conceptual framework and quantitative model are combined in a checklist to guide responsible managers through a formal, systematic decision-making procedure. Findings ‐ The model is fully described, its strengths and weaknesses are discussed, and the modus operandi of the derived decision-making framework is explained. The system and process are strongly advocated as the most appropriate instrument for the selection of suppliers of outsourced products and services in the contemporary business environment. Research limitations/implications ‐ The system suffers to an extent from one of its defining strengths: relative simplicity, which may limit its applicability in more complex situations. This emphasises the importance of the procedures undertaken in the "qualification" phase. Assigning evaluative values codes to the various decision parameters involves a good deal of subjectivity, which could lead to misguided decisions. Further research and development is needed. Practical implications ‐ The advocated selection offers outsourcing decision makers a structured and systematic selection framework, which does not compromise their own professionalism, but rather encourages imagination, innovation, investigation and opinion based on critical observation. Its potential applicability covers the full range of industry sectors, beyond the outsourcing of product and component manufacture which have been the focus of the great majority of published studies. Originality/value ‐ The paper examines a widely investigated "hot topic" that is in fact surrounded by confusion and misunderstanding. It focuses on aspects of outsourcing practice that have so far attracted little attention from researchers.

Keywords: Outsourcing; Purchasing; Selection; Sourcing

Document Type: Research Article

DOI: http://dx.doi.org/10.1108/02634500610711879

Publication date: December 1, 2006

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