of 3 - Center for Global Outsourcings

Introduction
Studying the scientific texts and articles published in recent years shows that outsourcing has
been more widely and increasingly used by organizations in different activities as an effective
response to the environment. Activities which were otherwise done by the organization itself are
now carried out by contractors from outside the organization [1]. Introducing the influential
factors that determine which activities/ processes could be outsourced, providing a practical
framework for managers to decide and implement outsourcing, and forecasting organization’s
outsourcing satisfaction is the main goals of this research.
In this paper, first, we designed and developed a structural framework for outsourcing
activities/processes. This framework is comprised of 3 parts and 8 stages:
� Selecting part (stages: 1.Designing and setting the suitable supplying strategy,
2.Primary selecting activity/ process, 3.Clarifying the situation of suppliers & rivals, and
4.Decision making about outsourcing or insoursing (make in house) activity / process)
� Implementing part (stages: 5.Evaluating & selecting suppliers, 6.Negotiations &
making contracts, and 7.Monitoring and controlling)
� Review part (stage: 8.Reviewing and revising)
And then we introduce our forecasting organization’s outsourcing satisfaction model.
Using the findings of these studies and the author’s experience in this regard, it has been
attempted to design and present a model or method for each stage so that all users could carry
it out in a better and more structured way. The framework and models proposed and introduced
in this study is based on Strategic Outsourcing Decision Guidebook [2] and the ideas developed
by Probert [3,4], Platts et al. [5], Yang.C [6], Water.H et al. [7] and McIvor [8,9,10] as well as the
existing decision making models presented in outsourcing studies.
Introducing Framework
This framework is comprised of 3 parts and 8 stages:
The first stage deals with designing and setting a proper supply strategy. We designed a new
model for this stage. This model consists of four main parts and helps the supply strategy
designers make a proper strategy based on a step by step procedure. Environmental factors,
main strategies, three strategic principles, and limitations/triggers are four main parts.
The second stage is Primary selecting activity/process. The prerequisite for preliminary
selection of the activity/process is to take the following factors into account: Preliminary
managerial decisions, determining the strategic reasons and their compatibility with the supply
strategy, establishing an evaluation team, and having a list made by the evaluation team of the
activities/processes in line with the supply strategy.
The third stage is identifying the competitors and suppliers. For using this framework, the user
should have comprehensive information about the competitors and suppliers. In order to identify
the competitors’ conditions, different methods could be used such as benchmarking, asking for
the customers’ opinions, and analyzing the market. In order to identify the suppliers, one could
also use the method introduced in the section related to the evaluation stage of the outsourcing
executive model.Forth stage is decision making to outsource activities/processes. One of the
main decisions, is deciding on Make or Buy, i.e. outsourcing versus insourcing (make in house)
[5]. We designed a new decision making model by using AHP (analytical hierarchy process).
This model gives a score for each activity/ process between 0-100 that we named it
“outsourcing score” in this paper. Lower score means make in house is better for under
deciding activity/ process, and higher score means outsourcing the activity/ process is better
decision.
Fifth stage is evaluating & selecting suppliers. Evaluating the suppliers often follows a structured
auditing approach. We suggest that a step by step evaluation process. This process consist of:
determining the key criteria, giving weight to each criterion of the evaluation, identifying and
Tenth Annual International Daejeon, South Korea P a g e | 22
Smart Sourcing Conference June 28-29, 2012