Managing regulatory risks when outsourcing network-related services in the electricity distribution sector

Deregulation of the electricity sector liberated the electricity sale and production for competitive forces while in the network business, electricity transmission and distribution, natural monopoly positions were recognised. Deregulation was accompanied by efficiencyoriented thinking on the whole electricity supply industry. For electricity distribution this meant a transition from a public service towards profit-driven business guided by economic regulation. Regulation is the primary means to enforce societal and other goals in the regulated monopoly sector. The design of economic regulation is concerned with two main attributes; end-customer price and quality of electricity distribution services. Regulation limits the costs of the regulated company but also defines the desired quality of monopoly services. The characteristics of the regulatory framework and the incentives it provides are therefore decisive for the electricity distribution sector. Regulation is not a static factor; changes in the regulatory practices cause discontinuity points, which in turn generate risks. A variety of social and environmental concerns together with technological advancements have emphasised the relevance of quality regulation, which is expected to lead to the large-scale replacement of overhead lines with underground cables. The electricity network construction activity is therefore currently witnessing revolutionary changes in its competitive landscape. In a business characterised by high statutory involvement and a high level of sunk costs, recognising and understanding the regulatory risks becomes a key success factor. As a response, electricity distribution companies have turned into outsourcing to attain efficiency and quality goals. This doctoral thesis addresses the impacts of regulatory risks on electricity network construction, which is a commonly outsourced activity in the electricity distribution network sector. The chosen research approach is characterised as an action analytical research on account of the fact that regulatory risks are greatly dependent on the individual nature of the regulatory regime applied in the electricity distribution sector. The main contribution of this doctoral thesis is to develop a concept for recognising and managing the business risks stemming from economic regulation. The degree of outsourcing in the sector is expected to increase in years to come. The results of the research provide new knowledge to manage the regulatory risks when outsourcing services.

Comparing service contract prices of outsourcing partner

The main objective of this Master’s thesis is to find out which one of the two pricing models is the most cost-effective. In this thesis there are two companies that have made an outsourcing contract, in which they have a possibility to choose between two different pricing models. The first model is so called FTE (Full Time Employee) -based. The total cost will be based on the amount of outsourced person-workyears. The second pricing model is the transaction-based, in which the price will be formed according to the amount of transactions. Changing the pricing model from FTE-based to the transaction-based will also incur other costs. It is very important that these other costs are also taken into consideration, so that it is possible to determine the total costs of the pricing models. These other costs are direct costs, indirect costs and performance related costs of outsourcing. Activity based-costing (ABC) was used in order to find out the trues indirect costs of the outsourced processes. Performance related costs are related to quality, so Pareto-analysis was used to analyse the costs. Based on all of that, a framework for service related cost analysis was developed. Quality costs were almost impossible to quantify, so quality had to be taken into consideration in a qualitative way. Furthermore, considering only the indirect and direct costs in a quantitative way and quality costs in a qualitative way, it was possible to find a conditional solution for the research question.

Quality management of outsourcing welded structure: case China

For any international companies who wish to enter the Chinese market, quality is base on the fundamental. The companies are coming to realize the importance of quality gradually, thus companies have been put the quality problems on the agenda. The competitiveness of companies comes from quality. Quality is the key to success, and it can decide that the companies can be accepted or eliminated by the market. Due to the obvious benefits, the demand of the method of how to achieve high quality of product keeps growing. During achieving the high quality process, the main troubles come from the impact between Eastern and Western culture. Chinese culture which is different with Western one have lasted as long as five thousand years. Such a culture deeply rooted in the hearts of Chinese people, and effected generation after generation of Chinese people's working style and ways of thinking. This thesis determines how to find a good fit point between Eastern and Western culture. Doing right thing by the right way. The nature of improving quality is improving management level in fact. "How to manage, who should be managed", the thesis explains the basic and best option to achieve those. It describes three-dimension-style management to monitoring the working process. This kind of management style can inspect production process from horizontal and vertical direction. In this management way, it defines effective evaluation system to every subcontractor, and makes the companies to achieve the ultimate goal - satisfy quality. Because of the importance of human factor, the thesis determines the range of training of the inspector and welder due to the current situation of China. The results show that in order to reach reliable training effective evaluation, not only the quality of the human but also the ultimate goal of product quality.

Outsourcing process in pharmaceutical product development

The aim of this study was to create an outsourcing process for pharmaceutical product development. This study focuses on two main questions. The first question is “What is the outsourcing process model?” In the second phase key success factors of the outsourcing process are identified. As a result of the literature reviews, a general outsourcing process was created. Transaction cost economics and resource based view were used to derived a theoretical framework to the process by combining the existing processes presented in the literature. The model of process is considered used to the outsourcing broadly. The general outsourcing process was then developed further with the key factors that affect the success of pharmaceutical product development and the interviews of pharmaceutical outsourcing experts. The result of the research was the process consists of seven phases with key activities and expected outputs for each of the phases. In addition, the strategic decision-making framework for outsourcing decision in pharmaceutical product development is giving as well as the tools for selecting supplier and preparing structured contract. This study also gives some recommendations for managing the outsourcing process.

Strategic outsourcing of R&D: The location-specific advantages of India to the pharmaceutical industry

Companies are increasingly under pressure to be more efficient both in terms of costs and overall performance and thus, they seek new ways to develop their products and innovate. For pharmaceutical industry it can take several decades to launch a new drug to the markets. Since pharmaceutical industry is one of the most research-intensive industries, is outsourcing one way to enhance the R&D processes of such companies. It is said that outsourcing to offshore locations is vastly more challenging and complicated than any other exporting activity or inter-company relationship that has evoked a lot of discussion. By outsourcing strategically, companies must also thoroughly focus on transaction costs and core competences. Today, the suppliers are looked for beyond national boundaries and furthermore, the location of the outsourcing activity must also be thoroughly considered. Consequently, the purpose of this study is to analyze what is known of strategic outsourcing of pharmaceutical R&D to India. In order to meet the purpose of the study, this study tries to answer three sub-questions set to it: first, what is strategic outsourcing, second, why pharmaceutical companies utilize strategic outsourcing of R&D and last, why pharmaceutical companies select India as the location for outsourcing their R&D. The study is a qualitative study. The purpose of the study was approached by a literature review with systematic elements and sub-questions were analyzed through different relevant theories, such as theory of transaction costs, core competences and location advantages. Applicable academic journal articles were comprehensively included in the study. The data was collected from electronic journal article databases using key words and almost only peer-reviewed, as new as possible articles were included. Also both the reference list of the included articles and article recommendations from professionals generated more articles for inclusion. The data was analyzed through thematization that resulted in themes that illuminate the purpose of the study and sub-questions. As an outcome of the analysis, each of the theory chapters in the study represents one sub-question. The literature used in this study revealed that strategic outsourcing of R&D is increasingly used in pharmaceutical industry and the major motives to practice it has to do with lowering costs, accessing skilled labor, resources and knowledge and enhancing their quality while speeding up the introduction of new drugs. Mainly for the above-mentioned motives India is frequently chosen as the target location for pharma outsourcers. Still, the literature is somewhat incomplete in this complex phenomenon and more research is needed.

Practical Framework for Monitoring the Performance of Agile IT Projects in an Output-Based Outsourcing Context

Over the past decade, organizations worldwide have begun to widely adopt agile software development practices, which offer greater flexibility to frequently changing business requirements, better cost effectiveness due to minimization of waste, faster time-to-market, and closer collaboration between business and IT. At the same time, IT services are continuing to be increasingly outsourced to third parties providing the organizations with the ability to focus on their core capabilities as well as to take advantage of better demand scalability, access to specialized skills, and cost benefits. An output-based pricing model, where the customers pay directly for the functionality that was delivered rather than the effort spent, is quickly becoming a new trend in IT outsourcing allowing to transfer the risk away from the customer while at the same time offering much better incentives for the supplier to optimize processes and improve efficiency, and consequently producing a true win-win outcome. Despite the widespread adoption of both agile practices and output-based outsourcing, there is little formal research available on how the two can be effectively combined in practice. Moreover, little practical guidance exists on how companies can measure the performance of their agile projects, which are being delivered in an output-based outsourced environment. This research attempted to shed light on this issue by developing a practical project monitoring framework which may be readily applied by organizations to monitor the performance of agile projects in an output-based outsourcing context, thus taking advantage of the combined benefits of such an arrangement Modified from action research approach, this research was divided into two cycles, each consisting of the Identification, Analysis, Verification, and Conclusion phases. During Cycle 1, a list of six Key Performance Indicators (KPIs) was proposed and accepted by the professionals in the studied multinational organization, which formed the core of the proposed framework and answered the first research sub-question of what needs to be measured. In Cycle 2, a more in-depth analysis was provided for each of the suggested Key Performance Indicators including the techniques for capturing, calculating, and evaluating the information provided by each KPI. In the course of Cycle 2, the second research sub-question was answered, clarifying how the data for each KPI needed to be measured, interpreted, and acted upon. Consequently, after two incremental research cycles, the primary research question was answered describing the practical framework that may be used for monitoring the performance of agile IT projects delivered in an output-based outsourcing context. This framework was evaluated by the professionals within the context of the studied organization and received positive feedback across all four evaluation criteria set forth in this research, including the low overhead of data collection, high value of provided information, ease of understandability of the metric dashboard, and high generalizability of the proposed framework.

The impact of a new partnership outsourcing arrangement: a routine-based case study in detail engineering

This thesis investigated the contemporary phenomenon of detail engineering outsourcing. The case organization had pursued a new outsourcing approach with a trusted partner. The goal of this empirical study was to examine the impact of the consequential partnership outsourcing arrangement. Particularly, the beneficence of the arrangement was evaluated based on the underlying organizational routine and the long-term economic implications of its performance outcome. The case study was needed, as the unit will likely have to rely on such distance outsourcing arrangements more and more in the future, and understanding on the impact of such operations is needed. The main findings revealed that the new outsourcing arrangement is not currently a very attractive strategic option for organizing production. The benefits which stem from the emerged, unique engineering project routine are not significant enough to make the arrangement an advantageous one, especially since increasing partnering costs are being met. This conclusion was drawn via the extended transaction cost view. Benchmarking was done in reliance to an old arrangement from which the new pursuit was a departure from. The case study then enlightened the engineering unit on the impact of its strategic maneuver by combining the routines-theory framework with contemporary methods of governance structure evaluation. Through this, it was shown that greater efforts are needed to make the new outsourcing approach a more beneficial one. However, the studied arrangement was seen to inhold potential for better results. The findings can be used to capitalize on this.

Intellectual Property Protection in China in the Cases of Outsourcing and own Manufacturing

The intellectual property (IP) environment in China is still very immature. There are several problems in legal, political, economic, social-cultural, competitive and labor environment which have hindered IP legal enforcement. Under such circumstances, IP misappropriation is a major concern especially for foreign small and medium-sized enterprises (SMEs) doing business in China. These circumstances require foreign companies, no matter whether they are multinational corporations (MNCs) or SMEs and have own manufacturing in China or not, to take strong IP actions. Therefore, the purpose of this study is to discuss how IP can be protected in China in the case of outsourcing and in the case of own manufacturing. The comparison will consider the process of outsourcing and own manufacturing consisting two stages: preparation stage and operation stage. In order to clarify the conceptual arguments, two illustrative case studies were studied. The case data bases on two semi-structured interviews of the managing directors, field notes and archival data. The findings propose that attention in IP protection should be given to following issues: integrating IP strategy into the company’s business strategy, protecting the most critical knowledge, regarding IP steps as a whole in the protection mechanism and making IP strategy as proactive as possible. The major difference between outsourcing and own manufacturing in IP protection is in the operation stage. Besides, the findings also provide managerial advice on IP protection, e.g. foreign managers should be prepared for IP risks in China, they should establish an own IP protection mechanism which matches the company’s situation and they should consider IP protection as an on-going process.

Improving customer service by identifying critical success factors and utilizing business process outsourcing

Consumers increasingly demand convenience when dealing with companies and therefore it is important to provide professional, diverse and speedy service via customer’s preferred communication channel. These interactions between the customer service and customer have a critical role in customer’s future purchasing decisions. Those customers who don't receive satisfactory customer service are willing to do business with another company that charges more but offers better customer service. This study identifies the critical success factors for the customer service in order to improve the customer service according to the company’s mission and meet customer expectations. Case study is used as a research method and data is collected via observation, archival records and interviews during a time span of fourteen months. The analysis suggests three critical success factors: voice support, scalable and flexible customer service and customer service champions. The study further analyzes the improvement measures according to the critical success factors concluding the Business Process Outsourcing to be the most proper to proceed with. As a conclusion of the study, critical success factors enable achieving the goals of the customer service and align operations according to the company’s mission. Business Process Outsourcing plays important role in improving the customer service by allowing fast expansion of new service offering and obtaining specialized workforce.

Mitigating uncertainty in logistics outsourcing with ERP systems

Outsourcing is a common strategy for companies looking for cost savings and improvements in performance. This has been especially prevalent in logistics, where warehousing and transporting are typical targets for outsourcing. However, while the benefits from logistics outsourcing are clear on paper, there are several cases companies fail to reach these benefits. The most commonly cited reasons for this are poor information flow between the company and the third party logistics partner, and a lack of integration between the two partners. Uncertainty stems from lack of information, and it can cripple the whole outsourcing operation. This is where enterprise resource planning (ERP) systems step in, as they can have a significant role in improving the flow of information, and integration, which consequently mitigates uncertainty. The purpose of the study is to examine if ERP systems have an effect on a company's decision to outsource logistics operations. Along the rapid advancements in technology during the past decades, ERP systems have also evolved. Therefore, empirical research on the subject needs constant revision as it can quickly become outdated due to ERP systems having more advanced capabilities every year. The research was conducted using a qualitative single-case study of a Finnish manufacturing firm that had outsourced warehousing and transportation operations in the Swedish market. The empirical data was gathered with use of semi-structured interviews with three employees from the case company that were closely related to the outsourcing operation. The theoretical framework that was used to analyze the empirical data was based on Transaction Cost Economics theory. The results of the study were align with the theoretical framework, in that the ERP system of the case company was seen as an enabler for their logistics outsourcing operation. However, the full theoretical benefits from ERP systems concerning extended enterprise functionality and flexibility were not attained due to the case company having an older version of their ERP system. This emphasizes the importance of having up-to-date technology if you want to overcome the shortcomings of ERP systems in outsourcing situations.