Content area
Full Text
Keywords
Sourcing, Strategic management, Outsourcing
Abstract
In this study, four sourcing strategies are identified in the delivery of maintenance service in facilities management, namely in-sourdng, out-tasking, outsourcing for cost saving, and outsourcing for capability. Since each of these strategies has merits under specific circumstances, a framework for the selection of appropriate sourcing strategy in particular situations is presented. This framework, which takes into consideration both the scope and purpose of the sourcing decision, was developed on the basis of results of earlier research and has been validated by the findings obtained from interviews with practitioners in exemplary organizations. This paper also provides guidelines for implementing the selected sourcing option, along with discussion of the related strategic and operational issues.
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Practical implications
The traditional approach to outsourcing cannot be the best sourcing strategy under all circumstances. Out-tasking is an alternative option that may be more appropriate in specific situations. This latter approach is widely practised in information technology and facilities management. While the strategic importance of out-tasking is generally recognized, little is understood about its practice. The decision matrix of strategic sourcing presented in this paper provides a useful management tool for selecting the appropriate sourcing strategy. In addition, the ensuing discussion on the implementation process offers insights into the strategic and operational issues related to putting specific sourcing strategies into practice. Although the proposed framework is formulated in the context of facilities management, its application can also be extended to the management of information technology, marketing, human resources and financial services.
Introduction
Corporations nowadays tend to contract out more manufacturing and service activities than they did a decade ago (Bates, 1997; Fuller, 2002; Musich, 1996; Tysdal, 1999). This trend has been driven by changes in the business environment and the pursuit of lean operations. Corporations stay lean to reap the benefits of cost reduction, better strategic focus, and agility in responding to fast market changes. The traditional approach to staying lean is through outsourcing, whereby a whole package of support function is off-loaded to an external service provider. This contrasts with in-sourcing, which is defined as the...