Single-plant sourcing decisions with a multidimensional knapsack model

This paper addresses sourcing decisions and how those decisions can affect the management of a company’s assets. The study begins with a single-plant insourcing problem in which the facility chooses, from a list of parts, which parts to bring in-house. This model is extended to include an outsourcing element where, in addition to the decision of which parts to insource, parts currently in-house are considered for outsourcing. The selection is based on maximizing the value of the selected parts while remaining within the plant’s capacity. This is defined as the sourcing problem and modeled as a multidimensional knapsack problem (MKP). Characteristics of the sourcing problem are identified and compared to standard MKP test problems, then utilized to provide guidelines for generating industry-motivated data sets. Experiences with modeling and solving the sourcing problem for a sheet metal fabrication facility are reported.     

Vendor selection in outsourcing

In any large organization, millions of dollars are spent on outsourcing. Most large organizations are outsourcing those activities that are either not cost efficient if done in-house or not core to their businesses. One of the most critical steps in outsourcing is vendor selection, which is a strategic decision. We model the vendor selection problem as a multi-objective optimization problem, where one or more buyers order multiple products from different vendors in a multiple sourcing network. Price, lead-time and rejects (quality) are explicitly considered as three conflicting criteria that have to be minimized simultaneously. A pricing model under quantity discounts is used to represent the purchasing cost. We present and compare several multi-objective optimization methods for solving the vendor selection problem. The methods include weighted objective, goal programming and compromise programming. The multicriteria models and the methods are illustrated using a realistic example. Value path approach is used to compare the results of different models.     

Developing a decision model for business process outsourcing

Information technology (IT) outsourcing has been one of the critical issues in organization management. Business process outsourcing (BPO) is an advanced type of IT outsourcing, which will be the next big wave in information technology services. Nevertheless, since prior studies have only examined issues related to traditional IS outsourcing, there have been few researches that introduce and discuss the important factors that should be considered in the decision of BPO adoption. This paper identifies factors affecting the BPO decision and structures a decision model using the analytic hierarchy process (AHP) method.By proposing a quantitative decision model, this paper will not only assist management in making better decisions in outsourcing their business processes, but also help them to obtain the most benefits from BPO.     

A multi-agent architecture for outsourcing SMEs manufacturing supply chain

In the present, global and competitive market customer's demands are very volatile. It is very difficult for small and medium size enterprises (SMEs) to satisfy their customer with quality product in reasonable price. Large firms are spending huge amount of their budget in generating technology development. To cope with this competitive market, usually, SMEs concentrate on their core expertise and outsource some non-core items or activities. The outsourcing decision (when, what, whom) is very crucial for small-scale industries. Realizing this scenario, in this article, an automated self-adaptive multi-agent system has been proposed. The proposed system will help SMEs to take an appropriate decision to mitigate the uncertainty in supply chain. The developed system exploits the “Outsourcing of operations” feature by its agents to conclude the manufacturing processes faster and reduce the idle time of certain machines with less human intervention. The communication protocol for agents has been described to give an insight of their communication. It was explained how various agents like outsourcing, material planning and supplier selection will come into action at different stages and take appropriate outsourcing decisions. Therefore, this multi-agent architecture will facilitate small scale manufacturing industries to execute their manufacturing processes and complex logistics issues efficiently. The execution of proposed architecture has been described in the simulated case study.     

线上零售商主导下供应链结构选择及演化

围绕线上零售商的特点,立足产品类型与物流外包两个维度,设计了四种类型供应链结构,研究了线上零售商主导下不同供应链结构的最优决策及选择策略;进而分析了制造商边际生产成本变化对供应链结构选择的影响。研究显示：承接物流二次外包的物流服务提供商不应作为线上零售商主导下供应链结构的主要参与主体;期初,线上零售商会面向功能型产品构建由零售商与物流服务集成商组成的供应链结构;后期,随着制造商边际生产成本的下降,其会优先选择创新型产品,构建由制造商、零售商以及物流服务集成商组成的供应链结构。在此基础上,为实现整个供应链效益及客户价值的最大化,线上零售商会逐步整合物流服务集成商,有效集成零售及物流资源,形成由制造商与零售商组成的供应链结构。通过数值分析验证了主要的研究结论。     

An assessment of the use of Transaction Cost Theory in information technology outsourcing

Transaction Cost Theory (TCT) has been widely used in information technology outsourcing (ITO) research to explain and predict outsourcing decisions and outsourcing-related outcomes. This research, however, has led to mixed and unexpected results in terms of the effects of transaction attributes on outsourcing decisions and outcomes. This study assesses the empirical literature employing TCT-based ITO models in terms of its faithfulness to the precepts of TCT, and argues that one possible explanation for the mixed results is that the extant models do not capture all the essential elements of TCT. First, there are core TCT constructs that the extant models do not take into account; second, the linkages among constructs that the IT outsourcing models have hypothesized are not always in line with TCT precepts; and third, the normative nature of the theory is not always captured by the extant models. This paper, therefore, aims to provide one possible answer to the question: “Why have the appropriations made of TCT to study IT outsourcing produced mixed results?”     

The impact of perceived risk on the capital market’s reaction to outsourcing announcements

Outsourcing is a widely accepted option in strategic management, which, like every business venture, bears opportunities and risks. Supplementing the popular area of research on the merits of outsourcing, this paper examines how stockholders rate corporate sourcing decisions with regard to the risk they associate with this transaction. Using event study methodology and multivariate cross-sectional OLS-regression, we analyze a sample of 182 outsourcing transactions in the global financial services industry between 1998 and 2004 in order to investigate the risk-specific drivers of excess returns to shareholders. The analysis studies the impact of risk-specific independent variables, including transaction size, length, outsourced business functionality, and experience with outsourcing. Our findings indicate that risk-mitigating strategies have significant explanatory power, indicating that the capital market’s reaction to an outsourcing announcement might at least partly be forecast. Results show a positive correlation between market reaction and business process outsourcing by financial services companies. We also find strong evidence indicating that capital markets react positively to relatively large transactions compared to the market capitalization of the outsourcing firm. For service providers our results show that traditional IT-related sourcing projects or the insourcing of administrative processes have a significant positive correlation with market reaction.     

Integrating carrier selection with supplier selection decisions to improve supply chain security

Supply chain security is a major concern for logistics managers who have responsibility for inbound and outbound shipments to and from both domestic and international locations. We propose here that logistics decisions concerning security in the supply chain will be made more effectively when made in concert with decisions in related supply chain processes, especially supplier and carrier selection. Indeed, managers may minimize cost, transit time, and security risk by integrating decision processes internally, as well as with their carrier's and supplier's operations. Thus, we account for both intra‐firm collaboration between logistics and purchasing managers, as well as inter‐firm collaboration among buyers, suppliers, and carriers in a supply chain. In this paper, we propose a decision process that features a set of security rules and a multi‐objective optimization model to accomplish this aim. We then provide an illustration to demonstrate the potential usefulness of these concepts in practice.     

A service-oriented analysis of online product classification methods

Studies of Internet market have found that consumers' purchasing behaviors including information search, channel selection, and brand evaluation processes are impacted by the product/service types. In this research, we perform a comprehensive review of existing online product classification methods. An in-depth analysis of the rationale behind each method was studied, and important product characteristics were determined for integrating different approaches. Grounded on the theory of the components of perceived risk in product purchase and the recently emerged service science, the integrated classification will help companies to better understand the online consumer purchasing behavior and to design their e-commerce strategies accordingly. Survey results indicate that the integrated classification is an effective way to classify products and services marketed on the Internet.     

两种需求模式下过度自信零售商的最优定价和订货联合决策

以报童模型为背景,研究过度自信零售商对市场需求的信念存在偏差时的决策问题.在加法和乘法需求模式下,探讨需求依赖价格和缺货加急订货时零售商最优定价订货联合决策问题.证明最优决策的存在性及唯一性,并给出最优决策的解析式.讨论过度自信对最优决策和期望利润的影响,分析过度自信零售商和理性零售商的信念期望利润与实际利润对比变化情况.对比结果表明,过度自信导致零售商利润的损失,能够为现实中零售商的定价订货决策提供理论依据.     

Data security services,solutions and standards for outsourcing

Globalization has resulted in outsourcing data, software, hardware and various services. However, outsourcing introduces new security vulnerabilities due to the corporation's limited knowledge and control of external providers operating in foreign countries. Security of operation is therefore critical for effectively introducing and maintaining these business relationships without sacrificing product quality. This paper discusses some of these security concerns for outsourcing. In particular, it discusses security issues pertaining to data-as-a-service and software-as-a-service models as well as supply chain security issues. Relevant standards for data outsourcing are also presented. The goal is for the composite system to be secure even if the individual components that are developed by multiple organizations might be compromised.     

IT outsourcing and firm-level performance: A transaction cost perspective

We analyzed the effect of the level of low asset specificity IT outsourcing on firm-level financial performance. We used transaction cost economics (TCE) as the theoretical basis to explain the effect of the level of network and telecommunication services outsourced on financial performance. An analysis of 1444 Integrated Healthcare Delivery Systems revealed that higher levels of network and telecommunication services outsourced were associated with superior financial performance. Specifically, each additional network and telecommunication service outsourced resulted in an average $3,120,000 in savings, a 25% increase in profit. In addition, increases in IT budgetary expenditures were found to be associated with increased financial performance. Our study provided preliminary support for the use of asset specificity to guide outsourcing decisions. In particular, IT activities that have become commodities (having ‘low specificity’) should be outsourced to improve the firm's financial performance.     

Trust in software outsourcing relationships: An empirical investigation of Indian software companies

This paper investigates trust in software outsourcing relationships. The study is based on an empirical investigation of eighteen high maturity software vendor companies based in India. Our analysis of the literature suggests that trust has received a lot of attention in all kinds of business relationships. This includes inter-company relationships, whether cooperative ventures or subcontracting relationships, and relationship among different parts of a single company. However, trust has been relatively under-explored in software outsourcing relationships. In this paper, we present a detailed empirical investigation of trust in commercial software outsourcing relationships. The investigation presents what vendor companies perceive about getting trust from client companies in outsourcing relationships. We present the results in two parts—(1) achieving trust initially in outsourcing relationships and (2) maintaining trust in ongoing outsourcing relationships. Our findings confirm that the critical factors to achieving trust initially in an outsourcing relationship include previous clients' reference and experience of vendor in outsourcing engagements. Critical factors identified for maintaining trust in an established outsourcing relationship include transparency, demonstrability, honesty, process followed and commitment. Our findings also suggest that trust is considered to be very fragile in outsourcing relationships.     

ICT and operations outsourcing in banking

Outsourcing of ICT (Information and communications technology) and Operations services has reappeared on the agenda of top management in European banking. As a contribution to this important topic, McKinsey & Company has carried out a comprehensive survey, based primarily on 70 interviews with executives of banks and providers. Key topics analyzed are: the relevance of outsourcing to address current challenges in banking; the value created by outsourcing and the barriers to its successful implementation; the degree of viability of outsourcing across specific services and functions; and likely developments in the outsourcing market. In addition, industry best practices have been collected and synthesized.     

南京市软件外包服务业人才需求及定制化培养

南京是中国服务外包基地城市和中国服务外包示范城市,软件外包服务是南京市软件产业新一轮发展的突破口,软件外包服务业的发展需要大量专业化人才,文章从调研南京软件外包服务业人才现状入手,探讨南京市软件外包人才的特性需求,提出不同岗位人才的定制化培养模式。     

Building outsourcing relationships across the global community: the UPS–Motorola experience

The United Parcel Service (UPS)–Motorola case study revolves around two major areas of information technology (IT) management: IT as a competitive tool and global outsourcing of IT projects. It provides an opportunity to become familiar with the decisions and actions taken by UPS to assure their competitive advantage in the turbulent courier services industry. In the IT outsourcing area, the case addresses managerial and technical issues associated with outsourcing IT projects across the global community. The case presents the specific factors that made this outsourcing project successful and discusses the development of the outsourcing relationships between UPS and Motorola (Israel), from initial negotiations to the creation of a strategic alliance between the two companies. A major point in this case is the gradual development of trust between the two sides, trust that led the two firms from being committed to a contract to becoming strategic partners.     

Scoring- und beidseitige Due-Diligence-Prozesse im Rahmen der Lieferantenauswahl beim Infrastrukturoutsourcing

Scoring and double-sided due diligence processes employed with vendor selection for IT infrastructure outsourcing Outsourcing opens the procurement of semi-finished products from business partners that are able to provide the respective processes in the required quality but at lower prices, e. g. because of bundling effects and specialization advantages. In particular, services that are not based on core-processes of an enterprise are well-suited for outsourcing. The evaluation of IT service outsourcing is difficult, because of its strategic position in enterprises. Against this background, this article describes a method to select a suitable vendor for IT infrastructure outsourcing employing scoring and double-sided due diligence processes. Our findings are based on experiences when selecting the vendor for outsourcing the European Information Technology Infrastructure (IT/I) area of the Deutsche Bank AG.     

On-demand e-supply chain integration: A multi-agent constraint-based approach

With e-business emerging as a key enabler to drive supply chains, the focus of supply chain management has been shifted from production efficiency to customer-driven and partnership synchronization approaches. This strategic shift depends on the match between the demands and offerings that deliver the services. To achieve this, we need to coordinate the flow of information among the services, and link their business processes under various constraints. Existing approaches to this problem have relied on complete information of services and resources, and have failed to adequately address the dynamics and uncertainties of the operating environments. The real-world situation is complicated as a result of undetermined requirements of services involved in the chain, unpredictable solutions contributed by service providers, and dynamic selection and aggregation of solutions to services. This paper examines an agent-mediated approach to on-demand e-business supply chain integration. Each agent works as a service broker, exploring individual service decisions as well as interacting with each other for achieving compatibility and coherence among the decisions of all services. Based on the framework, a prototype has been implemented with simulated experiments highlighting the effectiveness of the approach.     

An empirical investigation of the drivers of software outsourcing decisions in Japanese organizations

Although Japan represents the single largest Asian market and 10% of the global software outsourcing market, little is understood about how Japanese companies make software project outsourcing decisions. Tried-and-tested outsourcing models consistently fail to predict the outsourcing decisions of Japanese companies, leaving global software development companies with little usable guidance in the Japanese outsourcing market. Analyses of 396 software project outsourcing decisions made by 33 IT managers in Toshiba, Hitachi, Fujitsu, IBM-Japan, and Mitsubishi provides novel insights into the drivers of Japanese software outsourcing decisions. The objective of this paper is to develop an analytic tool to predict the likelihood of a software project being outsourced by Japanese IT managers.     

Determinants of information systems outsourcing: an empirical investigation in Japan

Two typical but different patterns of information system (IS) outsourcing are considered to be the most effective approaches in supply-chain management. These are conventional outsourcing and quasi-outsourcing. The latter is more generally adopted in large-scale organizations in Japan. In order to design an effective strategy, we will identify the factors which will have an important impact on the performance of IS outsourcing. In this article, we review the relevant literature on IS outsourcing, and propose four hypotheses. We test these four hypotheses by logistic regression analysis based on our original questionnaire survey of Japanese companies in order to find the relationship between IS outsourcing and its determinants. Finally, the implications of this study are discussed. Therefore, this article provides an empirical perspective to identify the determinants of conventional outsourcing versus quasi-outsourcing in Japan.