Over the past 2 decades, businesses have increasingly chosen to outsource their processes to other firms either as small, defined projects or through long-term contractual arrangements. The main reasons that often drive these arrangements, particularly from the perspective of original equipment manufacturing firms, is a desire to increase productivity, improve efficiency, and ultimately lower their costs in order to remain competitive in the global economy. However, outsourcing a firm's processes either in part or in whole to contract manufacturing facilities may come with increased quality risks that could potentially affect the original equipment manufacturing firm's product or processes. This study utilized an innovative process from a previous research that used a panel of experts in a Delphi process to obtain operational definition of the dependent variable, quality risk. Five dimensions of practices that mitigate quality risks in outsourcing relationships among original equipment manufacturers and their contract facilities were tested and analyzed through regression analysis against the dependent variable, quality risk. The results confirmed that individual factors and practices such as regulatory inspection compliance, certification programs, size of facilities, and other variables would not independently reduce quality risks in manufacturing outsourcing. The study recommends that managers who make decisions to outsource all or part of their products and services should consider a comprehensive assessment approach rather than focus on a single factor or practice that mitigates quality risks in outsourcing.
|Adviser||Luis E. Rivera|
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