Purpose
This paper aims to develop a procedure for preparing production transfers based on risk management principles. The procedure should help companies reduce the amount of supply chain disruptions during transfers and achieve their outsourcing/offshoring objectives.
Design/methodology/approach
The procedure was developed during a three-year Design Science study. First, a literature review and case studies were conducted to frame the research problem. Second, a preliminary procedure was developed based on preventive risk mitigation actions from the production transfer literature. Third, the procedure was implemented during an electronics-offshoring case and refined during workshops with the sender and receiver’s transfer personnel. Fourth, during a seminar, transfer practitioners verified the procedure by applying it to outsourcing/offshoring cases with which they had experience.
Findings
Most of the preventive actions were evaluated as relevant for the transfers the procedure was applied to, regardless of industry and relocation type. Moreover, the electronics-offshoring case showed that the success of a production transfer not only depends on the physical, knowledge and supply chain transfers, as presented in earlier research, but also on the administrative transfer and on the organisation, project and quality management actions. This paper also attempts to enhance the production transfer literature by clarifying transfer risk management.
Practical implications
The procedure can be used during the production transfer phase as a preparation procedure. Moreover, it informs the decision-making process during the relocation-decision and supplier-selection phases.
Originality/value
To the authors’ knowledge, this is the first production-transfer-preparation procedure based on risk management principles.
Many companies transfer production between them as part of relocation processes such as offshoring and outsourcing. Such production transfers (PT) are often associated with the risk of not achieving the expected performance results. Thus, many scholars and practitioners have acknowledged the importance of a thorough PT planning, based on risk management principles. One major principle is the assessment of PT risk in early stages of the process, in order to identify risk factors, analyze potential risk scenarios generated by the factors, implement risk-mitigation actions and improve PT performance. While several scholars have recommended conducting assessments early in the transfer process, which through the risk management lens, can be regarded as variants of risk assessment, there has not been published any recent review of the extant research on the risk assessment early in the PT process. Thereby, the main objectives of this paper are to identify and classify potential risk factors in the extant research, propose an assessment tool and test its utility on a longitudinal PT case. The paper also provides suggestions of how to apply the proposed tool to evaluate the requirements for resource intensive activities between the PT parties.
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