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Table of Contents

Introduction ............................................................................................................................... 2
The Findings.............................................................................................................................. 3
Hypothesis 1 ............................................................................................................................. 4
Hypothesis 2a to 2e .................................................................................................................. 4
Hypothesis 3 ............................................................................................................................. 4
Critic Hypothesis 1.................................................................................................................... 5
Critic Hypothesis 3.................................................................................................................... 6
Limitations................................................................................................................................. 8
Conclusion ................................................................................................................................ 9
Referencing ............................................................................................................................. 10
Word count: 2176
Introduction

It is obvious that the authors processed a great number of sections on the relationship between
strategic alignment and firms performances. The authors emphasized and explained series of
theoretical development of the hypotheses in conjunction with outsourcing strategies
emphasizing on the five priorities and its increasing competitive benefits. The research among
the competitive strategies and operational actions is well structured. The study had further
designed best practice in communicating to industry experts. The strategic control by the
experts leads to the understanding of the alignment among the outsourcing drivers and
competitive priorities being engaged into action.
The Findings

In fact, the effect of outsourcing alignment on the five priorities meant to be associated to both
supply chain and business performances. The findings support the strategic alignment in
considering whether the firm could insource or outsource an activity. It could help the readers to
understand concerns on which outsourcing could be total or discriminating, service or quality,
long or short period contract or neither involving single or multiple vendors. As for example, Dell
focuses its own resources based on the aspect of customer understanding and support scheme
downstream with shared information structure that develops their relationships with suppliers
upstream. Hence, the external suppliers provide Dells componentry design and innovation,
software, and manufacture for its computers (Squire, 2008).

However, the individual analyses on the findings of five competitive were not consistent and
needed to comprehend the firms competitive strategy before making its outsourcing decisions.
In the cost analysis, findings lead to extensive issues to the manufacturing outsourcing
decisions. The result implies that it is critical but yet the firms are not attempting to compete on
cost. It had also shown that there were unseen hidden costs in outsourcing activities which
further decrease the actual cost savings of the firm. As for the flexibility, their relationships
towards outsourcing were varied. It benefits the supply chain performance as the firm chose it
as a competitive priority but when compared to business performance, it becomes lowest. This
could result due to a trade-off effect and the costs associated with outsourcing will have
negative impacts on business performance.

The innovativeness related to both business and supply chain performances were better
associated as a competitive priority. It emphasized firms that by selecting innovativeness it
could determine outsourcing decisions were more convenient and improvised.

The next finding was the outsourcing decisions cited as part of quality improvements. The
impact of quality on outsourcing congruence leads firms to support their outsourcing decisions
as a competitive priority. Time was also found to be linked with supply chain performances as
the external suppliers leverage their knowledge and reduces the cycle times to conduct supply
chain activities. However, there was a negative relationship when findings showed it could be
the trade-offs associated with outsourcing improvising to compete on timeliness.

Both authors Anderson and Parker (2002) and Canez et al. (2000) developed a model to
evaluate cost and built a structure for the make-or-buy decision established on research
identifying factors in innovation and manufacturing processes, production cost, supply chain
management, support activities, and performance measures.

For example, Porters perceptions also implement that competitive advantage can be refined
through social trends, such as evolving a scientific advantage financing in computers and
communications. The outsource decision cannot be viewed as a distinct task but can be
regarded to outsource the whole function for long period that last for years (Squire, 2008).

The firm also distinguished core competencies as skills that access to the marketplace
delivering customer benefits which was hard for competitors to imitate (Prahalad and
Hamel,1990). The firm focuses on its core competencies and outsourced other roles to
suppliers who can carry out tasks efficiently. (Quinn and Hilmer,1994). The empirical study
reveals the strategic factors on the technology outsourcing identifying the value information
through technical support (Teng et al).

The hypothesis in this study are structured and were listed as H1, H2a, 2b, 2c, 2d, 2e and H3.

Hypothesis 1:

The general alignments among the competitive priorities indicating that supply chain
outsourcing drivers having constructive supply chain accomplishments.

Hypothesis 2a to 2e:

The cost, flexibility, innovativeness, quality and time influence a firms business and its supply
chain performance illustrates greater positivity in profits, enhanced revenues and return of
investments.

Hypothesis 3:

The business performance of a firm is progressively affecting its supply chain performance
positively.

The hypotheses tested in this study could also be associated to position of firms in Product-
Process matrix approach. The Hayes and Wheelwright (1979) product-process approach could
suggest that positions off the diagonal would be successful if the firm is in line with the firm's
competitive strategy. Although there is a tendency for firms to move to a position on the
diagonal only, it becomes increasingly unusual differentiating from their competitors. Therefore,
this success needs a revised business strategy that concerned with towards quality, lead time,
responsiveness and price for firms that could be below the diagonal, and likewise adapted
towards reputation, service and innovation above the diagonal (Vereecke, 2008).

Critic Hypothesis 1

The author has emphasized on the importance of operations strategies with five key competitive
priorities elements consisting of cost, flexibility, innovativeness, quality and time which ties to
outsource drivers. This article has mentioned that with higher level alignments of competitive
priorities with supply chain outsource driver results to positive effects on supply chain
performances. This are acceptable because of the positive results from their sampling,
methodology and analysis, however, this can be better presented if they further analyzed
multiple dimensions for each single element in depth. The combination for each competitive
priority and outsource driver is about five combination: cost to cost, time to time, flexibility to
flexibility , quality to quality and innovativeness to innovativeness (H2a-H2e). Our suggestion is
to compare each of them with five core drivers (Cost to cost, time, flexibility, quality and
innovativeness and so on).This will expand to twenty five combinations of analysis data and
result. As a result, this can better leverage and provide positive result of the impact before
outsourcing decisions are made. This multiple dimension and complex relationship must be
carefully researched as it will impact positive and negative of supply chain performances which
results to business performances. The authors uses single dimension which only can proof a
single area which may not give the outcomes of good judgment.

Our argument is simple, based on cross dimension and complex relationship which will provide
good result that verifies the positive performance for business. Ultimately, organization must
gain competitive advantage when they decided to outsource non-core, core product and
services to their suppliers. Organizations must ensure and evaluate all possibilities with positive
returns of investment and able to win against their competitors through better business
performances. Based on Michael Portal five forces analysis, the author should able to gain the
importance of this dynamic market analysis and provide details of outcome for the outsourcing
decision (Porter five forces analysis, 2015).

Author should consider and take all the sample data which are used in their structural equation
modelling (SEM) methodology analysis results and compute more relationship with competitive
priority and supply chain outsource driver. Although SEM has the limitation within this
methodology, it is able to analysis multiple complex relationship of each elements. Another SEM
research done by Janet L. on the limitations about SEM has proven these methodologies able
analyze more complex relationships with multiple data and samples (Janet L. Valluzzi, 2003).
Therefore, to our mind we feel that the authors should not stop their further research with
multiple complex relationships.

Critic Hypothesis 3

The study is also about supply chain performance that has positive impact to business
performance. We are supporting this statement which presented in single dimension
measurement and result. Our view is author should perform more research for supply chain and
business performance with outsource driver which will present more convinces data. This
research study is about accessing and evaluating the alignment of outsource driver with key
competitive priority with operation strategy which provide positive impact for supply chain
performance link to better business performance. It is extremely important to measure and
evaluate the relationship with outsource driver with supply chain performance as well as
business performance. Supply chain performance may not result positively and impact to
business performance because there are numerous internal and external elements influencing
by business climate which could result negatively. By using SWOT analysis based on Strength,
Weakness, Opportunity and Threat, the author could further analyze in details of their firms
internal strength and weakness as well as evaluating external opportunity and threat when
outsourcing is concerned (SWOT, 2015).

We urge author should separate the hypothesis 3 into three sections of different hypothesis for
detailed study (See Figure 1):

Hypothesis 3a: Outsource driver with supply chain performance, alignment with operation
strategy.

Hypothesis 3b: Outsource driver with business performance, alignment with operation strategy

Hypothesis 4: Supply chain performance had positive impact to business performance,


alignment with operation strategy.

An organization operation strategy usually align with firms core competency and competitive
priority strategies on; cost, quality, innovativeness, time and flexibility. This grouping will provide
high level assessment by observing the impact of alliance through a firms overall strategy.

Firstly, Hypothesis 3a and 3b will analysis in details of positive impact from each outsource
driver. We suggest under both hypothesis must segment with few key elements for analysis and
measure in order to compare the result of performance. First segment is Multidimensional
Competitors whereby highly focus on all five competitive priorities with outsources driver and
performance. Further proven by research done by Ward Journal has given more details (Ward,
1996). Second Segment is Innovative Customizers which highly focus on quality,
innovativeness and flexibility whereby time and cost received lowest attention. The researches
done by Roth given details why quality, innovativeness and flexibility are important when
outsource (Roth, 1994). Third segment is Caretaker, cost and quality are main focus area
followed by time, flexibility and innovativeness respectively.

Within each segment, the author required to examine the alliance between the five competitive
priorities and relative performance that effects the groups of outsource drivers related with each
competitive priority. Apart this segment, the author requires identify positive relationship among
the ranking of the competitive priorities and on effect of the outsourcing drivers based on both
supply chain and business performance (Figure 2). Those finding offer strong support for the
intention that outsourcing decisions need to study and be in alliance with a firms strategy. As a
result, both outcomes will further enhance the hypothesis 4 with resulting positive impact to
business performance.
Limitations

It identifies some issues that confine on high levels of performance where experts in reality
should study when constructing outsourcing decisions. Some recommendations were made that
researchers be guided by several methodological contributions that could provide to develop
outsourcing successful. Firstly, the firm could develop an updated scale initiating innovativeness
as a competitive advantage.

Secondly to improve new scales that could benefit the outsourcing drivers across a supply chain.
Lastly, the SEM interaction could be useful to a wide collection of the empirical studies.
Therefore, the findings as generalization examines one-to-one basis of interactions and to
implement on the close relationships among the five competitive priorities and the outsourcing
drivers.
Conclusion

These conclusion discloses that firms which has performed outsourcing activities experienced
decreased average costs, improved sales turnover and profitability, heightened expertise,
improved service quality, reduced staff strengths, streamlining of the production processes and
reduced administrative burdens as well as time-savings of its core activities. It is recommended
that companies that practices outsourcing of its core activities should continue to monitor the
contractors behaviors in order to safeguard compliances of international standards best
practices. Workers should be made to embrace the strategy before implementation to suppress
the horror of recessions and unemployment. We evaluate that quality is signified by the above
mentioned strategies implemented has high importance on the superiority of the outsourcing
drivers. The result from the analyzed study further supports the outsourcing congruence.
Referencing
Corbett, M. F. (2004). The Outsourcing Revolution. Retrieved April 7, 2015, from The Economist:
http://www.economist.com/media/globalexecutive/outsourcing_revolution_e_02.pdf

Janet L. Valluzzi, S. L. (2003, Mar 1). Indications and Limitations of Structural Equation Modeling in
Complex Surveys. Retrieved from 2003 Joint Statistical Meetings - Section on Survey Research
Methods: https://www.amstat.org/sections/SRMS/Proceedings/y2003/Files/JSM2003-
000198.pdf

Kroes, J. R. (2007). Outsourcing of Supply Chain Processes.

Porter five forces analysis. (2015, 4 17). Retrieved from Wikipedia,:


http://en.wikipedia.org/wiki/Porter_five_forces_analysis

Roth, M. a. (1994, Mar 1). Management Science. Retrieved from A Taxonomy of Manufacturing
Strategies: http://iic.wiki.fgv.br/file/view/A+Taxonomy+of+Manufacturing+Strategies.pdf

Sanchez, C. (2010, May). The Benefits and Risks of Knowledge Process Outsourcing. Retrieved April 18,
2015, from Ivey Business Journal: Improving the Practice of Management:
http://iveybusinessjournal.com/publication/the-benefits-and-risks-of-knowledge-process-
outsourcing/

(2008). Strategic Supply Management. In P. C. Squire. England: Reezcoolriz.

SWOT. (2015, 4 17). SWOT analysis. Retrieved from Wikipedia:


http://en.wikipedia.org/wiki/SWOT_analysis

Vereecke, A. D. (2008). The Product/Process Matrix.

Ward, P. L. (1996, 1 1). Journal of Management. Retrieved from Journal of Management:


http://test.scripts.psu.edu/users/g/i/gis1/ConfigMfgStrategy.pdf