By Daniel Nordigarden.
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Additional info for Outsourcing in the wood product manufacturing sector : a combined customer and supplier perspective
Two major dimensions to address when considering outsourcing a subsystems/ components (Adaptation based on: Venkatesan, 1992, p. 103) These two dimensions are in line with previous discussions about making the outsourcing decision on an activity level or technology level, what is different is the level of analysis. Based on his developed framework, Venkatesan also claims that managers often incorrectly make outsourcing decisions about individual components and neglect the fact that a manufactured product is made up of a number of systems and subsystems which themselves comprise of subassemblies of components (cf.
Instead some kind of collaborative outsourcing agreement should be selected. When the activity considered for outsourcing becomes a grey area between these dimensions, further analysis may be needed to really decide if outsourcing should be done. To further develop the above discussion the authors’ frameworks can in more detail be addressed. McIvor (2000a) suggests a four-stage conceptual framework to help companies formulate an effective make-or-buy decision including defining core activities, thorough cost analysis and an analysis of suppliers’ capabilities.
29 The starting point of above variables 1 and 2 seem somewhat similar whether evaluating the outsourcing decision on an activity or a technology level. Here, a difference in the model suggested by Welch and Nayak is to not focus on costly investments on developing technology which is already readily available. Based on Welch and Nayak’s framework the outsourcing decision can be made: Keep In-house. If the technology is expected to be a major determinant for competitiveness in the future and there is low maturity of the technology, outsourcing is not a suitable solution.