Measuring Outsourcing Efficacy: An Examination of Performance in the Aerospace Sector

• DOI: http://doi.org/10.1002/jsc.2014
• Author: Gareth R.T. White,Eoin Plant,Chris Lee,Laura Davies
• Published date: 01 July 2015
• Date: 01 July 2015

RESEARCH ARTICLE

Strat. Change 24: 339–350 (2015)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2014

Copyright © 2015 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2014

Measuring Outsourcing Efficacy: An Examination

of Performance in the Aerospace Sector1

Laura Davies

University of South Wales, UK

Gareth R.T. White

University of South Wales, UK

Eoin Plant

University of South Wales, UK

Chris Lee

University of South Wales, UK

On-site outsourcing can be an effective strategy for organizations but operational

performance may be temporarily hindered and recovery from this can take many

months.

is study explores an instance of outsourcing in an aerospace maintenance and

repair operation (MRO) in South Wales, where the inbound materials handling

and warehousing (IMHW) function has been wholly outsourced to a third-party

organization. In this respect the study is novel and sheds new light on the opera-

tional performance benets of outsourcing.

e host organization, located in South Wales, employs over 1000 sta and

its annual turnover is in excess of £1 billion. e outsourcing organization is a

provider of workforce solutions to organizations in aviation, defense, government,

and technology sectors. After outsourcing the IMHW function, the host organiza-

tion’s sta were retained and re-employed in other areas of the facility.

Specically, this study provides a quantitative analysis of the IMHW function,

comparing the throughput and accuracy of the function before and after outsourc-

ing. e analysis is made based on data extracted from the host organization’s

management information system (MIS), spanning the 13 months prior to, and

16 months post, the function being outsourced.

Using trend analysis, correlation, and linear regression analysis it nds that

on-site outsourcing can deliver comparable operational performance, in terms of

1 JEL classication codes: M00, M10.

On-site outsourcing can deliver

comparable levels of operational

performance for the host

organization.

Preparation for functional

handover requires careful

planning to minimize disruptions

and maximize operational

benefits.

Host organizations have a vested

interest in continuing to support

the outsourced function after

operational handover to maximize

performance.