Supplier selection for outsourcing from the perspective of protecting crucial product knowledge

Abstract

This paper considers the supplier selection problem in terms of the characteristics of the products/processes to be outsourced. Emphasis is placed on the possible risk that may arise in sharing or transferring crucial product/process knowledge to suppliers during outsourcing. Two indices are employed to assess the suitability of a supplier for outsourcing a product/process. The first measures the supplier's capability for technological innovation in the products for which they offer outsourcing services, and includes investment in R&D projects and the ratio of R&D personnel to the total work force. The second index measures the supplier's practices in protecting its clients' intellectual property rights, and includes corporate image, track record in protecting clients' intellectual property rights, and compliance with internal and external requirements. These two indices are then used to classify suppliers into four major groups, which are in turn assigned to classes of components/ processes depending on their strategic importance and vulnerability -a portfolio approach. The proposed portfolio approach has been validated via a substantial empirical study involving data for 401 parts, 216 suppliers, and 36 manufacturing companies operating in China.

Strategic purchasing participation, supplier selection, supplier evaluation and purchasing performance

“…In this study, we do not distinguish between strategic, non-crucial, bottleneck and leverage purchases (Blome, Hollos, and Paulraj 2014). Future studies can consider Kraljic Matrix Classification (Kraljic 1983;Rezaei and Ortt 2012;Wu et al 2013) to undertake a more nuanced understanding of the relationships based on the type of purchase. Finally, our study has the limitations associated with perceptual measures of performance.…”

Intellectual monopoly in global value chains

“…Its purpose is to circumvent the difficulty of using formal IP protection channels and to find other ways to enforce IPRs without limiting the scope of GVC activity. A first issue is supplier selection to minimize the risk of IP leaks (Wu, Li, Chu, & Sculli, 2013). There is also an attempt to move beyond legal procedure and use the reporting procedures created for the implementation of Corporate Social Responsibility to enforce stricter IPRs standards along the chains (Gillai, Rammohan, & Lee, 2014).…”

A framework for innovation outsourcing

“…Survey results support existing knowledge which identifies the need to use a broad and balanced range of criteria, both formal and informal, for selecting appropriate partners/providers. Formal selection criteria emphasised the protection of intellectual property (Wu et al, 2013), and finance. Informal criteria (e.g., trust), were used to build strong relationships (Ford et al, 2012).…”