publication . Article . 2009

Quality risk in outsourcing: Noncontractible product quality and private quality cost information

Kaya, Murat; Özer, Özalp; Ozer, Ozalp;
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  • Published: 01 Oct 2009 Journal: Naval Research Logistics, volume 56, pages 669-685 (issn: 0894-069X, eissn: 1520-6750, Copyright policy)
  • Publisher: Wiley
  • Country: Yemen
Abstract
This article addresses the concept of quality risk in outsourcing. Recent trends in outsourcing extend a contract manufacturer's (CM's) responsibility to several functional areas, such as research and development and design in addition to manufacturing. This trend enables an original equipment manufacturer (OEM) to focus on sales and pricing of its product. However, increasing CM responsibilities also suggest that the OEM's product quality is mainly determined by its CM. We identify two factors that cause quality risk in this Outsourcing relationship. First, the CM and the OEM may not be able to contract on quality; second, the OEM may not know the cost of quali...
Subjects
free text keywords: Management Science and Operations Research, General Engineering, Modelling and Simulation, Ocean Engineering, Quality management system, Quality policy, Quality management, Software quality control, Quality assurance, business.industry, business, Quality function deployment, Quality costs, Operations management, Contract manufacturer, Mathematics, HD0028 Management. Industrial Management
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