design companies supply outsourcing chain service strategies

Design outsourcing in the high-tech industry and its impact on supply chainstrategies##### AbstractThe practice of outsourcing product design to a service provider is prevalentin fast-moving high-tech electronics. Product design affects all subsequentactivities such as procurement, manufacturing, logistics and after-salesservices. Thus, companies do design for supply chain (DFSC), which is theprocess of designing products by incorporating such supply chainconsiderations as supplier selection and integration, single vs. multi-sourcing, component commonality, postponement, variety management, productreuse and recycling, planned obsolescence, etc. Each of these strategiesinvolves tradeoffs which become difficult to evaluate in an outsourcedenvironment. The levels at which companies engage with their service providersuch as fully outsourced or joint design, affect the degree of control theycan exercise over the design process. The main finding is that when productsare fully outsourced, companies have less control and therefore, a lowerpossibility of implementing DFSC. Certain measures are proposed wherebycompanies may influence DFSC implementation even in fully outsourced design.When some of the design is kept in-house in a joint design model, the level ofcontrol is high.(cont.) Another important finding is that design service providers actuallyachieve excellence in incremental innovation and do implement DFSC strategieswhich have cost-saving and revenue-generating benefits for them. Thedistribution of the resultant savings is primarily a function of the company’sability to understand the service providers’ cost structure and itsnegotiating power in the relationship. Two case-studies are included ofproducts where different outsourcing levels are used and the impact of thelevel of outsourcing is studied for each supply chain strategy.##### DescriptionThesis (M. Eng. in Logistics)–Massachusetts Institute of Technology,Engineering Systems Division, 2005.Includes bibliographical references (leaves 131-135).##### PublisherMassachusetts Institute of Technology##### KeywordsEngineering Systems Division.