INVESTIGATING THE RIGHT SIZE OF OUTSOURCING FOR THE ITEMS OF THE PRODUCTS FOR BATCH TYPE ENGINEERING INDUSTRY

Abstract

Manufacturing industries always look to improve manufacturing performance measured in terms of profitability. One of the decisions to improve the profitability is to outsource some parts or services. Some research has been carried out to find out the effect of make buy decision on firm profitability. However, more research/efforts are required to confirm the relation between the outsourcing and profitability. This thesis illustrates an attempt to know, how outsourcing influences the performance in manufacturing industries. To get the maximum benefits from outsourcing, one must decide the right size / quantity and right components/jobs to be outsourced. The scientific knowledge for deciding the right size or quantity of outsourcing is lacking. It is not sure whether industries are availing full advantages of outsourcing. A experience survey is carried out for batch type manufacturing industries to know the make buy trend and its effect on firm performance. The survey exposed the current trend of make-buy decision for the parts in a product and the relation between make or buy decisions and profitability. newlineThis thesis reports the studies related to outsourcing in the batch type manufacturing engineering industries from a perspective of manufacturer. newlineIn this study, driving factors for outsourcing for batch type engineering industries are identified. This study provides an understanding of driving factors for outsourcing in a different context than previously studied and has identified cost, technology, capacity, quality and risk as main driving forces and its effect on the firm performance. The performance improvement measured in terms profitability. newlineThe manufacturing industries always look for their better performance by correct decision of make or buy parts (of product) and one of the major factors for this decision is the technology available in-house or in the market/supplier. This thesis reports an attempt to know the relation between make or buy decisions and profitability for technology based classified