The Outsourcing Process: Strategies for Evaluation and Management

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Contents......Page 7
Figures......Page 10
Tables......Page 12
Illustrations......Page 13
Acknowledgements......Page 14
1 Introduction......Page 15
2.1 Introduction......Page 20
2.2 An overview of the outsourcing concept......Page 21
2.3.1 Globalisation......Page 24
2.3.2 Developments in information and communication technologies......Page 28
2.3.3 Public sector reforms......Page 29
2.3.4 More demanding consumers......Page 31
2.4 Evolving organisation structures......Page 32
2.5.2 Performance improvement......Page 35
2.5.4 Specialisation......Page 36
2.6.1 Cost increases......Page 37
2.6.2 Supply market risk......Page 38
2.6.4 Organisational change implications......Page 39
2.7 Inter-organisational relationship configurations......Page 40
2.7.1 Joint ventures and strategic alliances......Page 41
2.7.2 Collaborative buyer–supplier relationships......Page 42
2.7.3 Virtual corporations......Page 43
2.7.4 Public sector relationship configurations......Page 46
REFERENCES......Page 50
3.2 Transaction cost economics......Page 54
3.3 The resource-based view of the firm......Page 58
3.3.3 Imitability......Page 59
3.3.4 Organisation......Page 60
3.4 The industry view......Page 65
3.5 The relational view......Page 68
3.6.1 The RBV and TCE......Page 71
3.6.3 The RBV and IV......Page 72
REFERENCES......Page 73
4.2 Practical problems with the outsourcing process......Page 77
4.2.1 No formal outsourcing process......Page 78
4.2.2 Insufficient understanding of the costs associated with outsourcing......Page 79
4.2.3 Core business approach......Page 81
4.3 Background to the development of the outsourcing framework......Page 82
4.4.1 Stage 1–Determining the current boundary of the organisation......Page 84
4.4.2 Stage 2–analysis of the importance of organisational activities......Page 86
4.4.3 Stage 3–relative capability analysis......Page 87
4.4.4 Stage 4–an analysis of the strategic sourcing options......Page 89
Quadrant two......Page 91
4.4.5 Stage 5–relationship strategy......Page 92
Supply relationship strategy......Page 93
Quadrant two......Page 94
4.4.6 Stage 6–establish, manage and evaluate the relationship......Page 95
4.5 Implications for theory......Page 97
REFERENCES......Page 102
5.1 Introduction......Page 104
5.2 Value chain analysis......Page 109
5.3 The value chain......Page 112
5.4 The value shop......Page 114
5.5 The value network......Page 117
5.6 Business process perspective......Page 122
5.7 Depth of analysis......Page 124
REFERENCES......Page 128
6.1 Introduction......Page 129
6.2.1 The generic strategies......Page 130
6.2.2 Distinguishing between critical and non-critical activities in the context of outsourcing......Page 131
6.3.1.1 Threat of entry......Page 136
6.3.1.2 Supplier power......Page 137
6.3.1.4 Substitute products......Page 138
6.3.1.5 Rivalry......Page 139
6.4 Understanding the value concept......Page 141
6.4.1 Clarify the target market......Page 144
6.4.5 Determine the perceived price......Page 145
6.4.6 Plot the products on the customer matrix......Page 146
6.5 The critical success factors methodology......Page 149
6.5.1 Identification of CSFs......Page 152
6.5.2 Determine performance measures to monitor CSFs......Page 154
REFERENCES......Page 158
7.1 Introduction......Page 160
7.1.2 The source of the advantage......Page 161
7.2.1 Cost analysis......Page 162
Identifying cost drivers......Page 166
Activity-based costing......Page 168
Allocate activity costs to products/services......Page 169
7.2.2 Benchmarking......Page 175
Integrating benchmarking into outsourcing evaluation......Page 178
Benchmarking approach......Page 182
Analyse the activity......Page 183
Potential partner identification......Page 184
Data collection and analysis......Page 187
Performance gap analysis......Page 188
7.3 Analysing the source of advantage......Page 193
REFERENCES......Page 195
8.1 Introduction......Page 197
8.2 An analysis of the disparity in performance......Page 198
8.2.1 Unique historical conditions......Page 199
8.2.3 Causal ambiguity......Page 200
8.2.4 The influence of knowledge......Page 202
8.3 Technology influences......Page 204
8.4.1 Macro-level......Page 206
8.4.2 Industry/market level......Page 209
8.5 Supply market risk......Page 210
8.6 Behavioural considerations......Page 214
8.7 The implications of the strategic sourcing options......Page 220
Invest to perform internally......Page 222
Strategic outsource......Page 223
8.7.2 Quadrant two......Page 224
Strategic outsource......Page 225
8.7.4 Quadrant Four......Page 228
REFERENCES......Page 229
9.1 Introduction......Page 232
9.2 Establish objectives for outsourcing......Page 235
9.3 Supply relationship strategy......Page 237
9.3.1 Categorising the relationship......Page 239
Quadrant one–competitive collaborative......Page 240
Quadrant two–close collaboration......Page 241
Supplier involvement in product design and development......Page 243
Integrated order management and delivery systems......Page 244
Quadrant three–adversarial......Page 247
Quadrant four–secure supply......Page 249
9.4 Supplier development......Page 250
Stage 1 identify potential activities......Page 252
Stage 4 establish buyer–supplier development teams......Page 253
Stage 5 define terms of engagement......Page 254
Stage 6 implement, evaluate, and sustain......Page 255
REFERENCES......Page 257
10.1 Introduction......Page 259
10.2 Supplier selection......Page 260
10.2.2 Determine criteria for evaluation......Page 261
10.2.3 Evaluation......Page 263
10.3 Contracting issues......Page 264
10.3.1 Service level agreement......Page 266
10.3.3 Asset transfer......Page 268
10.3.7 Flexibility......Page 269
10.4.1 Managing the interaction process......Page 273
10.4.2 Assigning a relationship promoter......Page 276
10.5 Relationship performance evaluation......Page 278
10.5.1 Supplier performance......Page 279
10.5.2 The strength of the relationship......Page 282
10.5.3 The level of dependency......Page 284
REFERENCES......Page 288
11.2 An overview of Telco......Page 290
11.3 Developments in the telecommunications industry......Page 293
11.4 The impacts on Telco......Page 295
11.5 Strategy formulation at Telco......Page 296
11.6 Outsourcing evaluation and management cases at Telco......Page 298
11.6.1 Case one......Page 299
11.6.2 Case two......Page 301
11.6.3 Case three......Page 303
11.7 Relating the cases to the outsourcing framework......Page 305
11.8 Discussion......Page 310
11.8.2 Supplier switching......Page 313
Limited level of joint buyer supplier cost reduction......Page 314
11.8.4 Delivery and logistics management......Page 315
11.9 Going modular at Telco......Page 318
11.10 Concluding comments......Page 322
REFERENCES......Page 323
12.2.1 The strategic context......Page 325
12.2.3 The human resource implications......Page 327
12.2.4. Supply management capability......Page 328
12.2.5 Performance management......Page 329
12.3 Future developments......Page 330
REFERENCES......Page 334
Index......Page 335