Outsourcing or in-house manufacturing in Hi-tech industry: supply chain process with Delphi-AHP approach

• Published in: Kybernetes 2024-08, Vol.53 (9), p.2799-2823
• Main Authors: Qureshi, Sajjad Ali, Naseem, Afshan, Ahmad, Yasir
• Format: Article
• Language: English
• Subjects: Alternatives; Analytic hierarchy process; Brand loyalty; Communication networks; Competition; Competitive advantage; Component and supplier management; Core competencies; Cost analysis; Criteria; Data envelopment analysis; Decision making; Delphi method; Financial management; Houses; Linear programming; Literature reviews; Manufacturers; Manufacturing; Organizations; Outsourcing; Parameters; Procurement management; Production lines; Purchasing; Quality management; Suppliers; Supply chain management; Supply chains
• ISSN: 0368-492X; 1758-7883
• DOI: 10.1108/K-08-2022-1172

PurposeTechnological advancements have benefited businesses all over the world in how they set up production lines, create new products/services and trade goods. Multinational corporations can communicate instantly with their distant operations by utilizing information technology tools and communication networks. Businesses have taken a significant shift and new factors have emerged which affect company's competitiveness. In case of resorting to an outsourcing option, a comprehensive approach for valuing the essential criteria is often missing. While specifically focusing on the decisions that have a huge impact on company's performance, it is crucial to pay close attention to the ways of selecting suppliers. The purpose of research is to choose the optimal manufacturing alternative from a set of possibilities.Design/methodology/approachThe current research utilizes the Delphi technique for collection of vital criteria such as “quality”, “cost”, “delivery”, “warranties and claims”, “supplier profile”, “relationship and communication” and their respective sub-criteria. The purpose of research is to choose the optimal manufacturing alternative from a set of possibilities. In this regard, Analytical Hierarchy Process (AHP) technique is employed.FindingsThe current research enlightens that outsourcing can yield promising beneficial results. The results highlighted that in Hi-tech public sector organizations, international alternative is found best in almost all criteria especially in vital criteria such as “Quality”, “Cost”, “Delivery”, “Supplier Profile,” etc. Similarly, in case the outsourcing is done to a Domestic alternative, still the Domestic alternative is found effective in comparison to in-house manufacturing setups. The research showed unexpected results. Because previously it was assumed that in-house manufacturing would be more beneficial. However, the current findings support the “NASA” strategy which moved toward outsourcing to private sector.Research limitations/implicationsLimitations of the proposed methodology also produce opportunities for further exploration of the topic. One key limitation of the research described in this study is that the parameters and their sub-parameters interdependency were not taken under consideration. This means that quality and cost are not dependent upon each other. However, in reality quality and cost are interlinked. This means if quality is increased, cost is also increased. Similarly, for products having zer