The issue of strategic outsourcing has recently become the focus of renewed academic interest and has increasingly come to bear on managerial practice. This is particularly true when examining the role of outsourcing product and service innovation in the development of a firm’s competitive advantage and growth. There are several reasons for this. Firstly, the strategic outsourcing of decision-making alters a firm’s business model, as well as its value proposition and operating model. Secondly, strategic outsourcing intensifies the vertical relationships within the supply chain; this leads to the need to develop the relational skills of the firms involved – especially those of the focal firm (the strategic centre) – in order to integrate and coordinate the business actors, the work, and all the resources along the supply chain. Thirdly, strategic outsourcing makes it possible to extend the options to create and sustain the companies’ competitive advantage thanks to opportunities for accessing resources, skills, and knowledge otherwise hard to find in an individual firm in the short term. All of this comes at a high cost and with a strong element of risk.
Decision-making on outsourcing new product development (especially innovation projects), such as engaging and managing the supply chain, is far from easy. It may involve addressing strategic and operational risks that might cause longer development times and increase innovations costs. It is, therefore, imperative to select suppliers very carefully and set up an effective management strategy vis-à-vis the supply partners right from the inception phase. Supply chain management is facing enormous challenges, driven by three interrelated disruptions that will have a vast and lasting impact: the disruption of digital technologies, the disruption of social sustainability and environmental practices, and disruption due to Covid-19 and the most recent war in Ukraine. In the near future, the ability to address these disruptions will impact firms’ ability to manage the supply chain effectively and efficiently. It will also affect their ability to become best performers in innovation projects which require specific activities, resources and skills, in addition to knowledge of their supplier network.
The book is organised as follows. Chapter 1 focuses on the main transformations involving supply chains in today’s fast-changing and challenging times. It examines a case study involving Gruppo Schiano (section 1.3). Here we see how shifts in customer behaviour force innovation in the manufacturing paradigm and supply chain in the bicycle industry, which is now adopting digital technologies. The case study was written by Mario Schiano, the company’s CEO. Chapter 2 presents some business theories and their implications for strategic outsourcing, while Chapter 3 reviews existing models on decision-making for strategic outsourcing. It also highlights some notable gaps in the literature. After a discussion of the methodology adopted, Chapter 4 introduces the relevant case study for this book: this time the Boeing 787 Dreamliner programme (beginning with the early B787-8 programme and tracking it throughout the product’s life cycle with the launch of the new models B787-9 and B787-10). Chapter 5 illustrates the proposed outsourcing decision-making model for new product development activities in order to describe the fundamental dynamics behind strategic decisions. A discussion of our research findings on the embedded and in-depth longitudinal case study validates the research question and propositions stated in this book. The case study concludes with a description of the implications for management and some limits and opportunities for future research. Lastly, the afterword of this book – provided by Vincenzo Caiazzo, former Chief Operating Officer at Alenia North America & former Chairman of the Board at Global Aeronautica – judiciously presents an insider’s perspective of the supply chain in the aviation industry.
This volume offers a comprehensive overview of the decision-making models for outsourcing strategic activities. The proposed model suggests a valuable approach to outsourcing the decision-making strategies for new product development when the innovation is driven by technological innovation. The reader will find a more exhaustive framework than has appeared in the literature so far. It presents an integrated set of dimensions that may be helpful when a firm has to decide what kind of new product innovation activities (or strategic activities in general) it needs to outsource – and when. This decision-making model acknowledges the complexity of outsourcing strategic activities, making it an effective support for the decision-maker. This integrated perspective combines a theoretical framework with practical solutions for concrete action and management.
The Boeing 787 programme case study (Chapter 4) provides a comprehensive overview of the challenges that outsourcing product innovation can entail when a global supply chain is involved. It also considers the implication of these changes with regards to technologically complex products such as commercial aircraft, whose innovation depends on technological development, and especially new materials.
This contribution to the literature was inspired by some previous research projects, two of which stand out in particular. The first is a book edited by Luigi Cantone, 2003, titled Outsourcing e creazione del valore. Ridisegnare i modelli di business per conseguire il vantaggio competitivo, published by Il Sole 24 Ore, Milan. It contains a foreword by my unforgettable mentor, Prof. Lucio Sicca. From the early 1990s on, he encouraged me to study issues in procurement management and supply chain management from a strategic perspective. His counterfactual intelligence, scientific rigour and method will always be a pivotal point of reference for me. The second research project led to the article “Outsourcing new product development fostered by disruptive technological innovation: a decision-making model”, published in co-authorship with Pierpaolo Testa, Svend Hollensen, and Giuseppe Fabio Cantone in the International Journal of Innovation Management (June 2018).
The printing process of this book began over a year ago. Therefore, some specific data (i.e., on the aircraft industry) are not updated. However, the underlying assumptions, the reasoning and the outcomes proposed don’t change.
This book is the result of all the input and insights received from many people.
I wish to thank Prof. Pierpaolo Testa (University Federico II of Naples), and Dr Giuseppe Fabio Cantone PhD for their valuable contribution to researching and writing some of the chapters of this book with me. Giuseppe Fabio is a young PhD graduate and expert in branding. He is committed to business intelligence and works as a marketing analyst. His deep, counterfactual, and explorative mind will certainly nourish his personal and professional growth in the future.
I would also like to thank Prof. Svend Hollensen for his precious contribution to the article “Outsourcing new product development fostered by disruptive technological innovation: a decision-making model”, published in the International Journal of Innovation Management (June 2018), Prof. Luigi Maria Sicca for his interesting foreword to this book, and engineer Mario Schiano for his case study on Gruppo Schiano, where he is CEO. I also thank Vincenzo Caiazzo, Former Chief Operating Officer at Alenia North America & Former Chairman of the Board at Global Aeronautica, for his invaluable afterword on the “Supply chain in the aviation industry: an insider’s perspective”.
I also wish to mention some very close colleagues for their encouragement and support for the research and teaching activities involved: Dr Teresa Marrone PhD, Dr Vincenzo Basile PhD, Dr Nicola Cirillo PhD, and Prof. Paolo Calvosa.
I am grateful to the anonymous reviewers for supporting and revising the book proposal, and publishers Giappichelli-Routledge for believing in the project.
I am also grateful to Prof. Adrian Bedford for his precious proofreading of the manuscript.
Lastly, a heartfelt ‘thank you’ goes to my family: my beloved wife Anna Maria and our lovely sons Angelo and Giuseppe Fabio (co-author), who have been somewhat deprived of my company over the last few months but have always been there for me.
I would like to dedicate this new book to my lovely son Angelo. I trust the helping hand of our visible and invisible mentors will always protect him. His imaginative and creative mind is truly remarkable, as are his courage, resilience, responsibility, awareness, and respect, not to mention his love of beauty and style. It is my hope and belief that his life and dreams will be fulfilled as soon as possible.
Naturally, my co-authors and I are to be considered the only ones responsible for the contents.