Download - Outsourcing Electronic Manufacturing
![Page 1: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/1.jpg)
Exploration of Factors That Influence Failure in The Electronics Hardware Outsourcing Industry.
Oral Presentation
Submitted to the Faculty of Argosy University Campus, College of Business. In partial fulfillment of the requirements for
the Degree of Doctor of Business Administration
David O. Chavez 8-18-11
![Page 2: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/2.jpg)
} Research Problem: } Failure in outsourced manufacturing
� Survey: Only five percent achieve significant benefits (Lonsday, 1999).
� Survey considered 37% outsourcing engagement failures, (Barthelemy, 2003).
} Limited data exists in Electronic Hardware Manufacturing Outsourcing (EHMO) because: ◦ Publicity damage reputation and stock prices. ◦ High Technology Intellectual capital secrecy ◦ Competitive pressures
![Page 3: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/3.jpg)
} Research Problem Background ◦ $370 Billion Industry ◦ Global Industry ◦ Much Intellectual Property involved ◦ Over 4000 Contract Electronic Manufacturers supporting
Multinational Original Equipment Manufacturers. ◦ Impacts Manufacturing in the following industries: � Medical Device � Consumer Electronics (Cell phones, Tables, PCs, etc) � Aerospace Electronics � Military Electronics (Communications, etc.) � Industrial Controls � Communications (Infrastructure Hardware)
![Page 4: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/4.jpg)
} Main Research question: ◦ What did participants perceive as major factors that
influence failure in EHMO industry?
-Sub Questions: 1 How did participants perceive the alignment of
capabilities and goals as influencing failure in outsourcing in the EHMO industry?
2 What did participants perceive as failure in the EHMO industry?
3 What did participants perceive as the necessary types of people needed for a successful outsourcing relationships?
![Page 5: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/5.jpg)
} Market Drivers ◦ Cost Reduction: (Merrifield, 2006; Kroes, 2007; Griffiths, 2003; Harland, Knight,
Lamming, & Walker, 2005; Agrawal, Ferrel & Remes, 2003; Doig, Ritter, Spechals & Woolson, 2002; Value Cration, 2007)
◦ Increased Flexibility: (Lee, 2004; Loh & Vankatraman, 1992; Gottedson, Puryear, & Phillips, 2002; Harland et al. 2005; Ulric & Ellison, 2005)
◦ Access to Innovation: (Bozarth, Handfiel & Das, 1998; Harland et al. 2005, Gaio et al. 2005, Baloh, Sanjee & Yukika, 2008; Handfiel & Lawson, 2007; Baloh et al. 2008)
◦ Improved Quality: (Bozarth et al. 1998, Harland et al. 2005)
◦ Improved Time-to-market: (Webster, Alder & Muhlemann, 1997; Oberoi & Kamba, 2005)
![Page 6: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/6.jpg)
} General Capabilities: (Dastmalchi, 2007; Handfield & Lawson, 2007; Buckley, 2009, Baloh et al. 2008; Oberoi et al. 2005)
} Time: (Aron, 2005; Al-Salim, 2007, Gilley, McGee & Racheed, 2004; Lackow, 1999, Dastmalchie, 2007)
} New Product Introduction Stage: (Dastmalchie, 2007; Tatikonda & Stock, 2003; Sousa & Voss, 2007)
} Mix and Volume Capabilities: (Dostaler, 2001; Sousa et al. 2007; Ulrich & Ellison, 2005)
![Page 7: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/7.jpg)
} Product Life-Cycle: (Hua & Wemmerlov, 2006; Ulku, Toktay & Yucesan, 2005)
} Outsourcing wrong processes: (Harland, Knight, Lamming & Walker, 2005; Gottfredson et al. 2005; Baloh et al. 2008)
} Trust: (Jennings & Whitaker, 2010; Mashal & Szabo, 2010; Daz & Teng, 2001; Oberoi et al. 2005)
} Globalization Risks (Communication, culture, and language): (Whitman, 2008; Aron et al. 2005, Scheiderjans & Zukweiler, 2004; Dankbaar, 2007; Waehrens et al. 2008; Cateora, Gilly & Grahm, 2009; Rodenbaugh, 2010)
![Page 8: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/8.jpg)
Literature review Factors
Communication People Capabilities Flexibility Goals
Capabilities X X X X Outsourcing Wrong Processes
X X X X
Integration Risks
X X X X X
NPI/NPT Risks
X X X X X
Product Mix and Volume Risks
X X X X X
Product Life Cycle Risks
X X X X X
Costs X X X X X Innovativeness X X X X Quality X X X X Time Related X X X Lack of Trust X X X X X Global Risks X X X X X !
![Page 9: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/9.jpg)
} Rationale for Qualitative Research ◦ Complex and interrelated Human factors such as
trust, commitment, communication and business culture.
◦ Qualitative research is good for: � Providing Rich explanation of complex Phenomenon. � Discovery of Human experiences and perceptions. � Explore of evolving concepts or theories. � Further understand human relationships and patterns. (Rubin & Rubin, 2005; Cronbach, 1975; Hoepfl, 1997;
Bloomberg & Volpe, 2008)
![Page 10: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/10.jpg)
} Criterion-based Purposeful Sample selected (Electronics Hardware Executives, 10+ yrs).
} Develop Interview & critical incident questions & Demographic survey.
} (1) Pilot Sample
} Refine Research Design
} (8) Semi-Structured, In-depth, telephone interviews
} (1) Semi-Structured, In-depth, Face-to-Face Interview
} Data is recorded, transcribed, coded, & analyzed in Nvivo and Synthesized.
} Findings, conclusions & Recommendations
![Page 11: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/11.jpg)
} Rationale: Needed to have experience executives that have experienced failure and discuss details of factors.
} Total of 10 executives
} Electronics Hardware Executives with average of 10 year experience with CEMs, or OEMs.
} Participated in electronic outsourcing selection process.
} Manager, Director, CEO level experience
} Experience working either engineering, management, quality, supply Chain, procurement, or sales.
![Page 12: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/12.jpg)
} Primary data collection tool is the recorder during interviews.
} Recorder provided ability to: ◦ evaluate voice inflexion, ◦ emphasis on certain topics ◦ ability re-listen to details not gathered in live
interview. } Memos, Annotations of Data, Notes } Survey filled during interview
![Page 13: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/13.jpg)
} Read, re-read, listen to transcripts and annotate Data in NVivo.
} Assign Preliminary categories based on on transcripts and literature review.
} Translate Categories to “Free nodes” in Nvivo.
} Consolidate Free nodes to broad nodes in NVivo.
} Cross-code to capture data from prompted & non-prompted responses.
} “Coding-on” and break down some codes to further define (Tree Nodes in Nvivo).
} Validate Data (Text and Code association query)
} Synthesis of Data.
![Page 14: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/14.jpg)
![Page 15: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/15.jpg)
Capabilities 21%
Communication 20%
Goals 18%
Commitment 17%
Trust 11%
Flexibility 9%
Business Culture
4% Manual code References
Goals 25%
Communications 19%
Trust 17%
Capabilities 16%
Commitment 10%
Flexibility 9%
Business Culture
4% Text Query
![Page 16: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/16.jpg)
A Code Query searches for associations with two or more codes assigned in data.
![Page 17: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/17.jpg)
0
10
20
30
40
50
60
70
80
Manual Code association References
References
![Page 18: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/18.jpg)
![Page 19: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/19.jpg)
} Main Research question: ◦ What did participants perceive as major factors that
influence failure in the EHMO industry?
◦ Findings #1 1 Capabilities, 2 Communications, 3 Goals (cost, quality, delivery, functionality &
financial), 4 Trust, 5 Flexibility, 6 Commitment 7 Business Culture.
![Page 20: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/20.jpg)
Capabilities 21%
Communication 20%
Goals 18%
Commitment 17%
Trust 11%
Flexibility 9%
Business Culture 4%
Manual code References
![Page 21: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/21.jpg)
} Finding #2: The majority (65% of participant code association references) cited commitment & capabilities combined with other factors to influence failure with other factors the most.
![Page 22: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/22.jpg)
0
10
20
30
40
50
60
70
Par$cipant Code Associa$on References (Capabili$es and Commitment)
![Page 23: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/23.jpg)
} Sub-Question 1
How did participants perceive alignment of capabilities and goals influence failure in the EHMO industry?
Finding #3: The overwhelming majority (82% of participant references) cited commitment, capabilities and goals influence failure.
![Page 24: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/24.jpg)
Capabilities 35%
Goals 24%
Commiittment 23%
Flexibility 10% Value
8%
Manual Code References
![Page 25: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/25.jpg)
} Sub-question 2: What did participants perceive as failure? Finding #4: 96% of participants cited
misalignment of relationships, communications & goals as influencing failure.
Goals 39%
Communication 36%
Relationship 21%
Significant Loss 4%
Percep$on of Failure References
![Page 26: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/26.jpg)
Finding #5: 39% of participant references cited not meeting a critical goal (product price, quality, delivery, or functionality) as a failure.
![Page 27: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/27.jpg)
Finding #6: 34% of participant references cited problems with relationships and communications related to failure.
0
5
10
15
20
25
30
Communication & Relationships
Communications & Goals
Relationships & Goals
Communcation & Significant Loss
Goals & Significant Loss
Relationhships & Significant Loss
Code Association References
![Page 28: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/28.jpg)
Finding #7: 4% of participant references cited a “significant loss” related to failure. Significant loss is defined as a loss of large customer, opportunity, or catastrophic event.
![Page 29: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/29.jpg)
Finding #8: 100% of participant references cited a skilled communicator, dedicated, & Flexible as the necessary type of people needed for successful outsourcing relationships.
Finding #9: 52% of participant references cited a
dedicated as necessary characteristic for outsourcing relationship.
Dedicated 52%
Skilled communicator
37%
Flexible 11%
Successful People Manual Codes References
![Page 30: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/30.jpg)
Capabilties 29%
Business Culture 18%
Committment 17%
Flexibility 15%
Goals 13%
Communication 8%
Critical Incident Report Code References
![Page 31: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/31.jpg)
0 5
10 15 20 25 30 35 40 45 50
Code Association References
References
![Page 32: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/32.jpg)
} Failure occurs when one, some, or all of the following are misaligned: ◦ Communications ◦ Flexibility ◦ Commitment ◦ Goals ◦ Business Culture ◦ Capabilities ◦ Trust
![Page 33: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/33.jpg)
} Outsourcing cannot sustain non-achievement of certain critical organizational goals (price, delivery, quality, & functionality).
} Goals were listed: ◦ Top 3 (Main Question) ◦ Top 2 (Sub-Question 1) ◦ Top 1 (Sub-Question 2) ◦ Top 5 (Critical Incident)
![Page 34: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/34.jpg)
} Misalignment of goals, trust, commitment & communications are “Fundamental Factors” to most failures. All within Top 4-5 factors in Code references
Goals
Business Culture
Capabilities Flexibility
Communication Trust
Commitment
![Page 35: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/35.jpg)
} Trust, Communications, & Commitment are key building blocks of a CEM and OEM outsourcing relationship.
Trust
Commitment
Communication
Relationship
![Page 36: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/36.jpg)
} Capabilities and Goal alignment is not enough to prevent failure. OEMs and CEMs must be committed to each other. Code Association Analysis & Interviews.
} “Many-to-Many” communications lead to
“Many-to-Many” relationships to reduce failure. Code Analysis & Interviews.
} Significant loss: non-achievement of critical goals, or loss of key customer relationship.
![Page 37: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/37.jpg)
} Only (10) participants. } (5) Participants contributed much more in
Content to the study. } Limited on the impact of factors on specific
Industries (medical, military, industrial, consumer, etc.)
} Limited on the impact of factors on other geographic cultures, languages, markets and technologies.
} Researcher interviewing and probing skills. } Researcher Interpretation of data.
![Page 38: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/38.jpg)
Hard Factors
Goals Capabilities
Soft Factors
Relationships: Communication, Trust, & Commitment
Business Culture
Flexibility
Visible & measureable
Not Visible & hard to measure
The Outsourcing Factor Iceberg
![Page 39: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/39.jpg)
} Emphasizes “Soft Factors” when evaluating Outsourcing partners.
} Emphasizes managing and improvement of soft factors over time.
} Transcends to other outsourcing industries such as: ◦ Pharmaceutical, ◦ Call Centers, ◦ Mergers and Acquisitions ◦ Strategic Supplier relationships.
![Page 40: Outsourcing Electronic Manufacturing](https://reader034.vdocuments.us/reader034/viewer/2022051412/54873d4e5806b5992f8b4580/html5/thumbnails/40.jpg)
Thank you