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Sequencing Strategies and Coordination Issues in Outsourcing and Subcontracting Operations

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Planning Production and Inventories in the Extended Enterprise

Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 151))

Abstract

Managing the supply chain has recently been the most significant task for manufacturing companies toward cost efficiency and customer satisfaction. Globalization not only increased the size of supply chains, but also created an environment where competing suppliers, manufacturers, and distributors need to cooperate. Even when firms own a significant portion of their supply chain, multiple parties with different performance measures and goals are involved in the decision-making processes. Examples from the automotive industry include General Motors, Ford Motor Company and others. Each division in such organizations tries to reach optimal plans for the portion of the overall system under its authority. However, the extent to which the individual goals are achieved depends on the decisions made by other parties involved in supply chains. Therefore, the quality of the strategic decisions made by such decision makers depends on the amount of information they have regarding other members of the supply chain. The more information is shared among the decision makers, the greater the resulting coordination benefits.

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Notes

  1. 1.

    http://my.umc.com

  2. 2.

    http://www.ust.hk/spade

  3. 3.

    http://www.ust.hk/spade/pricelist.html

  4. 4.

    http://www.unido.org/doc/4547

  5. 5.

    Source: “Boeing Scrambles to Repair Problems With New Plane,” Wall Street Journal, December. 7, 2007.

  6. 6.

    For example, the “Supply Chain Scheduling Research” focuses on scheduling coordination and is sometimes about outsourcing, but except for Hall and Chen (2007) who consider cost allocation issues, the other six criteria are ignored.

  7. 7.

    See Sect. 12.1 for a discussion of Cisco’s eHub, MyUMC, and SPADE of HKUST.

  8. 8.

    Outsourcing is the act of transferring some of a company’s recurring internal activities and “decision rights” to outside providers (Greaver 1999).

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Acknowledgments

We would like to thank Professor Reha Uzsoy and two anonymous reviewers for their insightful comments on the earlier versions of this chapter.

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Authors and Affiliations

  1. Decision Sciences Department, Charles H. Lundquist College of Business, 1208 University of Oregon, Eugene, OR, 97403-1208, USA

    Tolga Aydinliyim

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  1. Tolga Aydinliyim
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  2. George L. Vairaktarakis
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Correspondence to Tolga Aydinliyim .

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Editors and Affiliations

  1. Decision Technologies, Intel Corporation, W. Chandler Blvd. 5000, Chandler, 85226, Arizona, USA

    Karl G. Kempf

  2. School of Industrial &, Systems Engineering, Georgia Institute of Technology, Ferst Drive NW., 765, Atlanta, 30332-0205, Georgia, USA

    Pınar Keskinocak

  3. , Edward P. Fitts Department of Industrial, North Carolina State University, Daniels Hall 300, Raleigh, 27695, North Carolina, USA

    Reha Uzsoy

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Aydinliyim, T., Vairaktarakis, G.L. (2011). Sequencing Strategies and Coordination Issues in Outsourcing and Subcontracting Operations. In: Kempf, K., Keskinocak, P., Uzsoy, R. (eds) Planning Production and Inventories in the Extended Enterprise. International Series in Operations Research & Management Science, vol 151. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-6485-4_12

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