A strategic perspective for insource/outsource decisions is provided for organizations whose competitive strategies are based on product differentiation and/or focus. The basic tenants of four previous frameworks for strategic sourcing from the literature are briefly reviewed. Following a critique of these frameworks, a new strategic sourcing framework is proposed. Elements of the framework are discussed in terms of primary factors (competitive advantage and demand flexibility) and secondary factors (process capability, process maturity, and strategic risk). A decision flowchart incorporating these factors is given to illustrate the functioning of the proposed framework. Implementation issues are discussed using a case study wherein two products from an electronics equipment manufacturer are subjected to sourcing decisions using the framework.
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