TITLE:
The Purpose of Outsourcing for Automotive Manufacturing Managers
AUTHORS:
Sonya Payne, Charles Needham
KEYWORDS:
Asset Specificity, Business Processes, Opportunity Costs, Outsourcing, Transaction Costs, Uncertainty, Automotive Manufacturing
JOURNAL NAME:
Open Journal of Business and Management,
Vol.12 No.5,
September
12,
2024
ABSTRACT: Automotive manufacturing managers continue outsourcing to save operating costs and remain competitive. Managers may encounter challenges when outsourcing functions despite the estimated cost-saving of 20% to 40%. Grounded by the transaction cost economics theory, this qualitative single case study explored successful strategies that automotive manufacturing managers use to partner with the appropriate organization to outsource their services. The target population consisted of 4 automotive manufacturing managers from one organization in the midwestern region of the United States. Data came from semistructured interviews and public documents from the company’s website. Yin’s 5-step data analysis process was the method to analyze the data. The 5 themes that derived from the data analysis process were: use various agreements for deliverables and flexible contracts, assess supplier metrics before partnering, establish trust and foster relationships with suppliers, assess financial factors, and assess capacity, efficiency, and reliability factors. Findings from the study may support managers who need to develop strategies to include agreement terms and conditions when partnering with a supplier. The implications for positive social change included the potential to expose managers and workers to the latest processes and technology from outsourcing suppliers. The company may benefit by streamlining internal processes and eliminating waste from automotive scrap material. The reduction of waste could improve environmental sustainability for the community.