A Decision Making Framework for Strategic Outsourcing

Abstract

Nowadays one of the most important decisions for the companies iswhether to outsource a part of the organizations’ value chain or not.Some studies show that majority of them, consider outsourcing as acost reduction approach, not as a strategic decision. Some researcheshave paid attention to this concept. This paper presents a decisionmaking framework which consists of five criteria, thirty scenarios andeight strategies. According to this framework, activities outsourcingdecisions can be made. This framework has been applied for thirtythree manufacturing sets of Samand automotive. The suggested optionfor twenty six of them is “Supplier Development and Outsourcing”,for five sets is “Insourcing”. “Partial Outsourcing” is suggested forone set and “Spin off” for another one.

Keywords

• outsourcing
• insourcing
• decision making
• value chain