Improving outsourcing framework by integrating with lean

Outsourcing has become a vital strategic element in all kinds of organisations ranging frommanufacturing to the service industry. Due to increasing trends a large number of organisations haveadopted or are in a process of adopting outsourcing. Currently organisations practising outsourcing havea financial advantage over others. However, in due course, many others will join the race and may causethe organisations practicing outsourcing to lose their competitive advantage. The organisations,however, prepared to practice outsourcing effectively by continuous improvement will achieveenhanced performance. An effective way to incorporate a continuous improvement strategy into theoutsourcing process is to integrate it with the lean system philosophy. This, however, is a complicatedtask. Over one hundred management tools have been listed that must be mastered to achieve the desiredresults (Bicheno, 2004). Despite this, different organisations are adopting various outsourcing models toacquire competitiveness (Brannemo, 2006). The selection of a suitable lean tool requires in depthunderstanding of the outsourcing process and strategies, by applying the lean philosophy to outsourcing,the final product cost can be reduced and the gap in the provider-consumer chain can be minimised bydeveloping a continuous flow. In order to successfully implementing the Lean Outsourcing model,workforce training is essential. A survey (Fan, 2000) shows that organisations are outsourcing ratherthan focusing on price and other issues of the business. Instead of continuously improving theoutsourcing programme by conventional means, it is advisable to develop and implement an integratedLean Outsourcing model, so that continuous improvement becomes a part of the strategy.Realizing the importance of improving the outsourcing process, an attempt has been made in this paperto develop a model for integrating it with the Lean system. The objective of this paper is to present howthe continuous improvement strategy can be incorporated into the outsourcing process by integrating itwith the lean system. Furthermore, the aim is to analyse, how effectively this can be done to achieve animproved outsourcing model. The Lean Outsourcing model can be used as a base for building acontinuously improving competitive sourcing decision model.