Sourcing Uncertainties: The Case of Outsourcing and Global Sourcing

Abstract

This article investigates uncertainties in global sourcing and outsourcing. The empirical research design is a multiple-case study that captures the uncertainties that companies face when sourcing low-cost countries (LCC) and when outsourcing to supplier markets that are in close proximity, but are non-developed. This article finds that, regardless of whether companies source to LCC or outsource to nearby suppliers, they face the problem of suppliers not having experience with the operations they run.Under such circumstances, operational uncertainties come into focus, particularly in the absence of a well-functioning supplier market. For practitioners, it is important to consider that a company must mitigate or manage uncertainties when it does not have a given supplier partner. The present study has found that mixed strategies, in which parallel production is continued in-house whilst also outsourcing, are a particularly effective way of managing multiples of uncertainties.