Presentation detailing Dissertation on Factors that Influence Failure within the Electronic Manufacturing Outsourcing Industry.

1. Exploration of Factors That Influence Failure in The
Electronics Hardware Outsourcing Industry.
Oral Presentation
Submitted to the Faculty of Argosy
University Campus, College of Business. In
partial fulfillment of the requirements for
the Degree of
Doctor of Business Administration
David O. Chavez
8-18-11

2. } Research Problem:
} Failure in outsourced manufacturing
– Survey: Only five percent achieve significant benefits
(Lonsday, 1999).
– Survey considered 37% outsourcing engagement
failures, (Barthelemy, 2003).
} Limited data exists in Electronic Hardware
Manufacturing Outsourcing (EHMO) because:
◦ Publicity damage reputation and stock prices.
◦ High Technology Intellectual capital secrecy
◦ Competitive pressures

3. } Research Problem Background
◦ $370 Billion Industry
◦ Global Industry
◦ Much Intellectual Property involved
◦ Over 4000 Contract Electronic Manufacturers supporting
Multinational Original Equipment Manufacturers.
◦ Impacts Manufacturing in the following industries:
– Medical Device
– Consumer Electronics (Cell phones, Tables, PCs, etc)
– Aerospace Electronics
– Military Electronics (Communications, etc.)
– Industrial Controls
– Communications (Infrastructure Hardware)

4. } Main Research question:
◦ What did participants perceive as major factors that
influence failure in EHMO industry?
-Sub Questions:
1 How did participants perceive the alignment of
capabilities and goals as influencing failure in
outsourcing in the EHMO industry?
2 What did participants perceive as failure in the EHMO
industry?
3 What did participants perceive as the necessary types
of people needed for a successful outsourcing
relationships?

5. } Market Drivers
◦ Cost Reduction: (Merrifield, 2006; Kroes, 2007; Griffiths, 2003; Harland, Knight,
Lamming, & Walker, 2005; Agrawal, Ferrel & Remes, 2003; Doig, Ritter, Spechals &
Woolson, 2002; Value Cration, 2007)
◦ Increased Flexibility: (Lee, 2004; Loh & Vankatraman, 1992; Gottedson, Puryear,
& Phillips, 2002; Harland et al. 2005; Ulric & Ellison, 2005)
◦ Access to Innovation: (Bozarth, Handfiel & Das, 1998; Harland et al. 2005, Gaio
et al. 2005, Baloh, Sanjee & Yukika, 2008; Handfiel & Lawson, 2007; Baloh et al. 2008)
◦ Improved Quality: (Bozarth et al. 1998, Harland et al. 2005)
◦ Improved Time-to-market: (Webster, Alder & Muhlemann, 1997; Oberoi &
Kamba, 2005)

6. } General Capabilities: (Dastmalchi, 2007; Handfield & Lawson, 2007;
Buckley, 2009, Baloh et al. 2008; Oberoi et al. 2005)
} Time: (Aron, 2005; Al-Salim, 2007, Gilley, McGee & Racheed, 2004; Lackow, 1999,
Dastmalchie, 2007)
} New Product Introduction Stage: (Dastmalchie, 2007; Tatikonda
& Stock, 2003; Sousa & Voss, 2007)
} Mix and Volume Capabilities: (Dostaler, 2001; Sousa et al. 2007;
Ulrich & Ellison, 2005)

7. } Product Life-Cycle: (Hua & Wemmerlov, 2006; Ulku, Toktay & Yucesan,
2005)
} Outsourcing wrong processes: (Harland, Knight, Lamming &
Walker, 2005; Gottfredson et al. 2005; Baloh et al. 2008)
} Trust: (Jennings & Whitaker, 2010; Mashal & Szabo, 2010; Daz & Teng, 2001;
Oberoi et al. 2005)
} Globalization Risks (Communication, culture, and
language): (Whitman, 2008; Aron et al. 2005, Scheiderjans & Zukweiler, 2004;
Dankbaar, 2007; Waehrens et al. 2008; Cateora, Gilly & Grahm, 2009; Rodenbaugh,
2010)

8. Literature Communication People Capabilities Flexibility Goals
review Factors
Capabilities X X X X
Outsourcing X X X X
Wrong
Processes
Integration X X X X X
Risks
NPI/NPT X X X X X
Risks
Product Mix X X X X X
and Volume
Risks
Product Life X X X X X
Cycle Risks
Costs X X X X X
Innovativeness X X X X
Quality X X X X
Time Related X X X
Lack of Trust X X X X X
Global Risks X X X X X
!

9. } Rationale for Qualitative Research
◦ Complex and interrelated Human factors such as
trust, commitment, communication and business
culture.
◦ Qualitative research is good for:
– Providing Rich explanation of complex Phenomenon.
– Discovery of Human experiences and perceptions.
– Explore of evolving concepts or theories.
– Further understand human relationships and patterns.
(Rubin & Rubin, 2005; Cronbach, 1975; Hoepfl, 1997;
Bloomberg & Volpe, 2008)

10. } Criterion-based Purposeful Sample selected (Electronics Hardware
Executives, 10+ yrs).
} Develop Interview & critical incident questions & Demographic
survey.
} (1) Pilot Sample
} Refine Research Design
} (8) Semi-Structured, In-depth, telephone interviews
} (1) Semi-Structured, In-depth, Face-to-Face Interview
} Data is recorded, transcribed, coded, & analyzed in Nvivo and
Synthesized.
} Findings, conclusions & Recommendations

11. } Rationale: Needed to have experience executives that
have experienced failure and discuss details of factors.
} Total of 10 executives
} Electronics Hardware Executives with average of 10
year experience with CEMs, or OEMs.
} Participated in electronic outsourcing selection
process.
} Manager, Director, CEO level experience
} Experience working either engineering, management,
quality, supply Chain, procurement, or sales.

12. } Primary data collection tool is the recorder
during interviews.
} Recorder provided ability to:
◦ evaluate voice inflexion,
◦ emphasis on certain topics
◦ ability re-listen to details not gathered in live
interview.
} Memos, Annotations of Data, Notes
} Survey filled during interview

13. } Read, re-read, listen to transcripts and annotate Data in NVivo.
} Assign Preliminary categories based on on transcripts and
literature review.
} Translate Categories to “Free nodes” in Nvivo.
} Consolidate Free nodes to broad nodes in NVivo.
} Cross-code to capture data from prompted & non-prompted
responses.
} “Coding-on” and break down some codes to further define (Tree
Nodes in Nvivo).
} Validate Data (Text and Code association query)
} Synthesis of Data.

15. Business
Culture Text Query
4%
Flexibility
9% Goals
Commitment 25%
10%
Capabilities Communications
16% 19%
Trust
17%
Flexibility
Business
Culture Manual code References
9% 4%
Trust
11% Capabilities
21%
Commitment Communication
17% 20%
Goals
18%

16. A
Code
Query
searches
for
associations
with
two
or
more
codes
assigned
in
data.

17. Manual Code association References
80
70
60
50
40
30
20 References
10
0

19. } Main Research question:
◦ What did participants perceive as major factors that
influence failure in the EHMO industry?
◦ Findings #1
1 Capabilities,
2 Communications,
3 Goals (cost, quality, delivery, functionality &
financial),
4 Trust,
5 Flexibility,
6 Commitment
7 Business Culture.

20. Manual code References
Business Culture
4%
Flexibility
9%
Capabilities
Trust 21%
11%
Communication
Commitment
20%
17%
Goals
18%

21. } Finding #2: The majority (65% of participant
code association references) cited
commitment & capabilities combined with
other factors to influence failure with other
factors the most.

22. Par$cipant
Code
Associa$on
References
(Capabili$es
and
Commitment)
70
60
50
40
30
20
10
0

23. } Sub-Question 1
How did participants perceive alignment of
capabilities and goals influence failure in the
EHMO industry?
Finding #3: The overwhelming majority (82% of
participant references) cited commitment,
capabilities and goals influence failure.

24. Manual
Code
References
Flexibility
10% Value
8%
Capabilities
35%
Commiittment
23%
Goals
24%

25. Sub-question 2:
}
What did participants perceive as failure?
Finding #4: 96% of participants cited
misalignment of relationships,
communications & goals as influencing
failure.
Percep$on
of
Failure
Significant Loss References
4%
Relationship
21% Goals
39%
Communication
36%

26. Finding #5: 39% of participant references cited
not meeting a critical goal (product price,
quality, delivery, or functionality) as a failure.

27. Finding #6: 34% of participant references cited problems with
relationships and communications related to failure.
Code Association References
30
25
20
15
10
5
0
Communication Communications Relationships & Communcation & Goals & Relationhships &
& Relationships & Goals Goals Significant Loss Significant Loss Significant Loss

28. Finding #7: 4% of participant references cited a
“significant loss” related to failure.
Significant loss is defined as a loss of large
customer, opportunity, or catastrophic event.

29. Finding #8: 100% of participant references cited a
skilled communicator, dedicated, & Flexible as the
necessary type of people needed for successful
outsourcing relationships.
Finding #9: 52% of participant references cited a
dedicated as necessary characteristic for outsourcing
relationship.
Successful
People
Manual
Codes
References
Flexible
11%
Skilled Dedicated
communicator 52%
37%

30. Critical Incident Report
Code References
Communication
8%
Goals Capabilties
13% 29%
Flexibility
15%
Business Culture
18%
Committment
17%

31. Code Association References
50
45
40
35
30
25
20
15
10
5
0 References

32. } Failure occurs when one, some, or all of the
following are misaligned:
◦ Communications
◦ Flexibility
◦ Commitment
◦ Goals
◦ Business Culture
◦ Capabilities
◦ Trust

33. } Outsourcing cannot sustain non-achievement
of certain critical organizational goals (price,
delivery, quality, & functionality).
} Goals were listed:
◦ Top 3 (Main Question)
◦ Top 2 (Sub-Question 1)
◦ Top 1 (Sub-Question 2)
◦ Top 5 (Critical Incident)

34. } Misalignment of goals, trust, commitment &
communications are “Fundamental Factors” to most
failures. All within Top 4-5 factors in Code references
Goals
Communication
Trust
Commitment
Capabilities Flexibility
Business
Culture

35. } Trust, Communications, & Commitment are
key building blocks of a CEM and OEM
outsourcing relationship.
Communication Trust
Relationship
Commitment

36. } Capabilities and Goal alignment is not
enough to prevent failure. OEMs and CEMs
must be committed to each other. Code
Association Analysis & Interviews.
} “Many-to-Many” communications lead to
“Many-to-Many” relationships to reduce
failure. Code Analysis & Interviews.
} Significant loss: non-achievement of critical
goals, or loss of key customer relationship.

37. } Only (10) participants.
} (5) Participants contributed much more in
Content to the study.
} Limited on the impact of factors on specific
Industries (medical, military, industrial,
consumer, etc.)
} Limited on the impact of factors on other
geographic cultures, languages, markets and
technologies.
} Researcher interviewing and probing skills.
} Researcher Interpretation of data.

38. The Outsourcing Factor Iceberg
Hard Factors
Visible & Goals
measureable Capabilities
Not Visible &
hard to
measure Soft Factors
Relationships:
Communication, Trust, & Commitment
Business Culture
Flexibility

39. } Emphasizes “Soft Factors” when evaluating
Outsourcing partners.
} Emphasizes managing and improvement of
soft factors over time.
} Transcends to other outsourcing industries
such as:
◦ Pharmaceutical,
◦ Call Centers,
◦ Mergers and Acquisitions
◦ Strategic Supplier relationships.

40. Thank you