Operational implications of manufacturing outsourcing for subcontractor plants: an empirical investigation

Purpose - The objectives of this paper are: to identify the key defining elements of a subcontractor plant from an operations management perspective and examine whether there are differences between the operational contexts of such plants and original equipment manufacturer (OEM) plants; and to examine whether these differences should translate into different operational practices, addressing the specific case of process quality management practices. Design/methodology/approach - The paper uses a multiple case study involving five plants in the electronics industry representative of the OEM and different subcontractor contexts. Findings - Results suggest that the operational contexts of subcontractor and OEM plants are different and that, as a result, these types of plants should emphasize different sets of process quality management practices. Research limitations/implications - Results are considered to be generalizable to most discrete goods industries. However, future research should ascertain whether these results replicate in industries other than electronics. Practical implications - OEMs, who have a critical role in disseminating best practice within the supply chain, must recognize the differences between OEM and subcontractor environments and avoid pushing one-size-fits-all best practice programs along the chain. Originality/value - Research in outsourcing to date has focused on the outsourcing decision per se and has mainly taken the perspective of the outsourcer firm. This study contributes to a better understanding of the operational implications of outsourcing decisions for subcontractor plants. It also responds to calls for more research linking quality management and supply chain management.