Managing Quality in Outsourced Production: Construct Development and Measurement Validation

Abstract

There exists a large body of academic and practitioner literature that has led to a deep understanding of the practices and behaviors necessary to manage quality within a firm's own factory walls. However, the literature on the effectiveness of the approaches used by buyers to manage the quality of outsourced production is surprisingly scant. In this paper, the authors develop and evaluate scales that are necessary for academic research on the management of production outsourced to contract manufacturers (CMs). They use the existing empirical, analytical, and practitioner literature to generate and define relevant constructs. They develop new scales where necessary and adapt existing scales where possible to measure these constructs. They then follow a two-stage approach to assess their reliability and validity. In the first stage, the authors follow a rigorous item-sorting process to refine these scales. In the second stage, they employ factor analyses using data collected from 123 buyers and 100 CMs to formally assess multiple forms of reliability and validity; they find that most of their scales exhibit good psychometric properties and can be used for research. The authors conclude the paper with some suggestions for research on managing quality in outsourced production.

• contract manufacturing
• empirical research methods
• outsourcing
• quality management

Additional information

Notes on contributors

John Gray

John Gray is an assistant professor of operations management at The Ohio State University's Fisher College of Business. Gray studies the operational antecedents and consequences of outsourcing and offshoring, with a focus on quality risk. Gray's dissertation, Essays on Manufacturing Outsourcing, was awarded a Juran Fellowship from the University of Minnesota, and was also the winner of the Decision Science Institute's 2007 Elwood S. Buffa Doctoral Dissertation Competition. His research has been published in several outlets including Production and Operations Management, Decision Sciences, and the Journal of Supply Chain Management. He developed an MBA elective called Global Sourcing at Ohio State, for which he was awarded “Outstanding Working Professional MBA Elective Professor” by the students in 2010. Prior to pursuing his doctorate, Gray worked at Procter & Gamble in operations management for eight years. He can be reached at [email protected].

Sean Handley

Sean Handley is an assistant professor of supply chain management at Rutgers University. Handley's research interests are in the areas of strategic sourcing, global supply management, and buyer/supplier relationships. His current research program is focused on how organizations effectively manage strategic outsourcing initiatives. His dissertation work looked at the salient elements of the outsourcing process and their impact on the performance of outsourcing initiatives. He is currently working on an in-depth research project to study how organizations manage quality with outsourced manufacturing in the food, drug, medical device, and regulated cosmetic industries. Handley's research has been published in the Journal of Business Logistics and Journal of Operations Management.