The Purpose of Outsourcing for Automotive Manufacturing Managers

Sonya Payne¹, Charles Needham²

¹Grand Canyon Education, Inc., Phoenix, USA.
²School of Business, Liberty University, Lynchburg, USA.

DOI: 10.4236/ojbm.2024.125165                

Abstract

Automotive manufacturing managers continue outsourcing to save operating costs and remain competitive. Managers may encounter challenges when outsourcing functions despite the estimated cost-saving of 20% to 40%. Grounded by the transaction cost economics theory, this qualitative single case study explored successful strategies that automotive manufacturing managers use to partner with the appropriate organization to outsource their services. The target population consisted of 4 automotive manufacturing managers from one organization in the midwestern region of the United States. Data came from semistructured interviews and public documents from the company’s website. Yin’s 5-step data analysis process was the method to analyze the data. The 5 themes that derived from the data analysis process were: use various agreements for deliverables and flexible contracts, assess supplier metrics before partnering, establish trust and foster relationships with suppliers, assess financial factors, and assess capacity, efficiency, and reliability factors. Findings from the study may support managers who need to develop strategies to include agreement terms and conditions when partnering with a supplier. The implications for positive social change included the potential to expose managers and workers to the latest processes and technology from outsourcing suppliers. The company may benefit by streamlining internal processes and eliminating waste from automotive scrap material. The reduction of waste could improve environmental sustainability for the community.

Keywords

Asset Specificity, Business Processes, Opportunity Costs, Outsourcing, Transaction Costs, Uncertainty, Automotive Manufacturing

1. Background and Introduction

Some automotive manufacturing managers outsource the manufacturing of their automobiles. The leaders from the motor vehicle industry use outsourcing suppliers to assist them in producing more vehicles (De Backer & Miroudot, 2014). Some organization managers outsource goods or services as part of their strategic cost-reduction efforts (Brewer et al., 2013). Failure to develop effective outsourcing strategies is a problem that influences organizations (Chatha & Butt, 2015). Taking the time to develop appropriate outsourcing strategies may help negate unexpected costs and enhance production. In this qualitative case study, I explored automotive managers’ strategies to partner with the appropriate outsourcing organizations to outsource services. This section includes information about the research questions, conceptual framework, definitions of terms, assumptions, limitations, delimitations, and the significance of the study.

Some organization managers decide to outsource instead of performing work in-house. Outsourcing is becoming popular with automotive manufacturing managers with a renewed focus on business profitability (Lu & Wang, 2018). During the 1990s, management shifted to outsourcing processes to reduce and control operating costs (Brewer et al., 2013; Liu & Tyagi, 2016). Automotive manufacturers keep the organization competitive, and outsourcing may align with the business strategy (Soosay et al., 2016). To mitigate failure during outsourcing, a strategy component should focus on managing the partnership arrangement with the supplier (Pratap, 2014). Managers should link business processes to the organization’s strategy to improve performance and profit (Looy et al., 2014). Despite the cost-saving potential of outsourcing, managers may encounter challenges when deciding to outsource only some functions. The challenges may include maintaining organizational performance, deciding what to outsource or when to outsource, selecting the appropriate partner, and unexpected hidden costs (Kumari et al., 2015). Decision-makers need to understand the critical factors in mitigating risk, whether outsourcing or using other strategies.

1.1. Purpose Statement

The decision to outsource is often the result of managers planning to reduce costs and improve production (Lacity & Willcocks, 2014). Approximately 75% of outsourcing companies experience production disruption because of a supplier error (Yoon et al., 2018). The general business problem is that when privatizing business operations, some automotive manufacturing managers do not determine the appropriate outsourcing organization, which results in production inefficiencies and extra costs. The specific business problem is that some automotive manufacturing managers lack strategies to partner with the appropriate organization to outsource services.

1.2. Research Question

The central research question guiding this study was: What strategies do automotive manufacturing managers use to partner with the appropriate organization to outsource their services?

1.3. Assumptions, Limitations, and Delimitations

Assumptions are ideas out of a researcher’s control (Marshall & Rossman, 2014). Two assumptions were relevant to this single case study. Participants knew the successful strategies they used to partner with an outsourcing organization. The participants provided honest and truthful responses to the interview questions. The limitations are issues beyond the researcher’s control and can include potential weaknesses in the study (Helmich et al., 2015). Although the study participants appeared knowledgeable, no biased responses occurred during the interview. The participant’s responses were self-reported, and they may not have been able to recall past details, which could contain biases. The population of this study was in the Midwest region of the United States. The limitation of a geographic location for the study limited the study’s generalizations. Therefore, the results could not include leaders in other geographic areas. Delimitations are the boundaries and scope of the research (Mitchell & Jolley, 2012). The study included automotive managers who worked for a manufacturing organization in the midwestern region of the United States. The midwestern region of the United States was appropriate because of the proximity to complete the research in a populated automotive manufacturing community. Managers from non-manufacturing organizations did not participate in the study.

1.4. Significance of the Study

Managers in automotive manufacturing organizations evaluate the effectiveness of an in-house or outsourced product (Meixell et al., 2014). In a competitive climate, refining business processes leads to organizational efficiency. Outsourcing begins with an effective strategy assessing the product, resources, and cost. The results of this study could contribute to business practices that help automotive manufacturing managers make effective outsourcing decisions. Outsourcing is a competitive strategy (Brewer et al., 2013). Outsourcing to gain a competitive advantage is a good decision. Outsourcing is a strategy to reduce costs and improve the competitive advantage (Foerstl et al., 2016). If managers determine the pertinent business processes of the suppliers that they are outsourcing, the organization may gain a competitive advantage. The business processes considered when partnering with an outsourcing supplier include the cost of materials, parts, and production (Nosoohi & Nookabadi, 2016). Understanding managers’ strategies when collaborating with outsourcing organizations could provide insight into the role of TCE and production costs.

2. A Review of the Academic Literature

Transaction Cost Economics (TCE)

Managers may use transaction cost economics theory to improve outsourcing initiatives. Managers indicated that using TCE is appropriate for increasing the success rate of outsourcing (McIvor, 2016). Several studies included outsourcing-related transaction cost economics (TCE) (Meixell et al., 2014; Scherrer-Rathje et al., 2014; Wacker et al., 2016). A review of outsourcing utilizing TCE was appropriate because of the strategic decision-making regarding processes to determine cost. Managers use TCE to improve efficiency and performance when considering related costs compared to the costs of performing the services internally (Coase, 1937; Lacity et al., 2016). TCE includes the boundaries of an organization internally or externally (Brewer et al., 2013). Managers can apply the theoretical lens of TCE to explore when a manufacturing organization outsources and determine the necessary factors for partnering with an effective outsourcing strategy (Odin et al., 2023). Managers who experienced outsourcing a manufacturing product using a structural model revealed the positive implementations of manufacturing outsourced products and suggested the need for managers to develop an outsourcing strategy (Brewer et al., 2013). Managers should commit to learning the factors for an effective outsourcing strategy to select the appropriate organization to align with production needs.

Understanding the functions of an outsourcing strategy may mitigate risks. From an economic perspective, managers need to understand the functions of an outsourcing strategy (Coase, 1937). Economics includes the presumption that the market is efficient, and firms produce their goods and services; however, hiring another firm to produce may prove cost-effective. With the correct governance, managers can determine whether to produce internally or contract with others to produce externally. Managers can influence organizational development through economics by producing activities with low transaction costs (Coase, 1937; Williamson, 1985). For an organization to achieve integration, managers must understand the costs involved and act strategically to use resources to obtain goals (Williamson, 1985). The role of managers is to minimize the cost of goods or services (Williamson, 1985). The management function of minimizing the cost of goods is a variable of the TCE theory, similar to the firm’s resource-based theory (RBT). Understanding an organization’s resources may assist managers in generating profits. The firm’s resource-based theory includes understanding outsourcing decisions and outcomes (Sato, 2023). The types of transactions a firm can conduct within the firm’s boundaries comprise three essential characteristics: specific assets, uncertainty, and frequency (Williamson, 1985). Manufacturing managers may consider transaction characteristics when partnering with the appropriate organization to outsource services. The significance of a manager’s consideration of transaction cost characteristics is beneficial when predicting the scope of outsourcing activities and organizational performance (Elia et al., 2014). A manager’s knowledge of the organization’s assets will help decide which product to outsource to the appropriate organization.

A type of transaction that a firm’s management can consider is a specificity asset. When determining which organization is the appropriate choice to outsource production services, paying attention to the specific asset is essential. Managers should determine if another organization could quickly produce an asset without compromising product value (Huang, 2014). The more specific an asset becomes, the transaction cost increases and may lead to difficulty redeploying without a value loss. A firm manager may be able to determine what occurs in a single transaction, while another manager in a different firm may not have the analytical skills. TCE includes two behavioral assumptions: bounded rationality and opportunism (Williamson, 1985). Bounded rationality assumes that those who make the decisions have the capability and rationality. Through TCE, managers may gain insight regarding bounded rationality and not just consider outsourcing decisions on cost reductions (Foerstl et al., 2016). Opportunism is the assumption that a party may see an opportunity to exploit a situation at the expense of the other. Managers’ understanding of assets is beneficial for determining what a transaction includes. When initiating an outsourcing plan, managers should understand the potential of uncertainty. One of the critical constructs of transaction cost theory is uncertainty (Weber & Mayer, 2014). Uncertainty is the unknown future costs of a transaction that are difficult to assess and may affect the organization’s level of performance (Lewis, 2014). The transaction cost theory distinguishes environmental and behavioral uncertainty (Hesping & Schiele, 2016). High uncertainty may increase transaction costs, including coordination and transaction risks. Regarding outsourcing, uncertainty is a critical feature of the specific function outsourced (Odin et al., 2022). With uncertain future costs, managers must decide what strategies will help implement an outsourcing plan with the appropriate organization.

With strategic management, managers should elect to produce transactions in-house with high asset specificity and behavioral uncertainty because the risks and costs of outsourcing (externalizing) are significant and inefficient (Williamson, 1985). Asset specificity can negatively influence the effect of outsourcing mix and volume (Scherrer-Rathje et al., 2014). Studies include TCE as a lens through which to view asset specificity. The data collected from a logistics supplier in the automotive industry through semistructured interviews and site visits with executives indicated five conditions (Bennett & Klug, 2012). The five conditions critical to outsourcing integration in the automotive industry are geographical proximity, delivery contents, volume and sequence, shared investment, and asset specificity (Bennett & Klug, 2012). The conditions to concentrate on suppliers could also aid automotive manufacturing managers when collaborating with an organization to outsource services. As more automotive manufacturers outsource, management’s understanding of the integration between the organization and the supplier is essential (Klug, 2014). Managers familiar with the conditions critical to outsourcing may make better decisions.

Flexibility is a critical component of the impact on organizational performance. Once a manager decides to outsource, the extent of flexibility in making changes is unknown for months (Liu & Nagurney, 2013). The extent of flexibility is unknown to management because the supplier partnership is new, and there is uncertainty about production demands. Managers use an analytical framework around demand and cost uncertainty to evaluate outsourcing and in-house quick-response production decisions (Liu & Nagurney, 2013). The results from the analytical framework revealed that with outsourcing decisions, those manufacturers without quick response production capability are willing to accept that cost will increase when the demand of uncertainty increases (Liu & Nagurney, 2013). The more uncertainty in an exchange relationship, the less the buyer can identify and assess possible risks (Hesping & Schiele, 2016). Managers’ understanding of high uncertainty and transaction costs may assist in preparing an effective outsourcing plan when partnering with another organization.

Understanding the frequency of transactions can help with evaluating resources. How often a transaction will occur is frequency (Williamson, 1985). Frequency is a characteristic of a transaction in the TCE theory. Calculating frequency may help identify the components necessary to create the transaction. Most transactions reoccur, but some do not, leading to inaccurate estimations when partnering with an outsourcing organization (Guo et al., 2015). Managers must understand the frequency of how often a transaction occurs when developing an outsourcing plan with the appropriate organization. When considering outsourcing, an awareness of the assets required is helpful. Durable transaction-specific investments refer to asset specificity (Williamson, 1985). A manager must understand durable transactions when deciding between producing an item internally or an outsourcing arrangement. If a manager determines that another firm should produce an item, knowledge is necessary to determine the outsourcing firm’s responsibility when undertaking the transaction (De Vita & Tekaya, 2015; Speckbacher et al., 2015). Some manufacturers have experienced success when outsourcing part of their production to another company (Liu & Nagurney, 2013). The manufacturing managers experience success because they have a strategy for quick responses to the production capabilities. Manufacturing managers need to include the perspective of the outsourcing firm as a part of the strategy when partnering on services to outsource. The perspective that managers need to consider is the outsourcing firm’s capabilities. Managers remain diligent in accessing the outsourcing firm’s capabilities, including an examination to confirm specifications for accuracy to produce the product with adequate resources (Spring & Araujo, 2014).

Managers should develop preparedness to work through unforeseen challenges with the outsourcing firm (Spring & Araujo, 2014). Managers’ preparedness before outsourcing starts could assist with handling unforeseen challenges. Resource-based view theory aligns with a manager’s focus on transaction cost economics: efficiency (Hitt et al., 2016). RBT included the effective use of resources to influence the firm’s boundaries. TCE criticism stems from opportunism and little focus on the organizational manager’s characteristics and contract selections (Foss & Weber, 2016). The managerial rationale for strategic decisions on outsourcing stems from TCE, the RBT view, the core competencies, and the approach theories (Cesarani, 2014). Managers may consider RBT along with TCE when making strategic outsourcing decisions.

Alternative theories related to the conceptual framework of the TCE theory include several other theories. Other theories emerged, including resource-based theory (RBT), knowledge-based view (KBV), and agency theory. First, RBT is like TCE because the theory includes a framework to explore organizational competitiveness by focusing on the organization’s internal characteristics instead of environmental conditions (Nason & Wiklund, 2015). Concerning RBT, the foundation dates to the work of Barney (1986). The RBT of the firm includes the inside of the organization as well as the resources and capabilities to show the profit and value of the organization (Barney, 1986). RBT applies when managers explore an organization’s resources to gain a competitive advantage. Properly managing resources is beneficial when managing suppliers and new product development (Hitt et al., 2016). While RBT is similar to TCE, and a theory selected when exploring outsourcing is RBT, which is different from TCE because the focus is on organizational performance and how managers internalize activities within the organization as opposed to outsourcing (Kirchoff et al., 2016; McIvor, 2016). The following alternative theory is a knowledge-based view (KBV).

KBV theory encompasses the organizational manager’s knowledge of whether to integrate based on the cost of an activity (Grant, 1996). Knowledge is an essential function of the KBV theory, yet difficulty exists when measuring managerial and operational knowledge and implementing an effective organizational strategy (Handfield et al., 2015). A manager’s knowledge is an asset to the organization and helps sustain a competitive advantage (Singh, 2013). New developments include knowledge management systems that are evolving and applied to analyzing management activities to improve organizational efficiency (Singh, 2013). KBV theory is vital for managers in analyzing activities effectively to improve organizational efficiency. The KBV theory is suitable for managers who want to manage administrative processes but does not include a framework for managers implementing an outsourcing plan (Oliva, 2014). The final alternative theory to address is the agency theory.

Agency theory is appropriate for including information when an individual (principal) hires another individual (agent) to perform a service and delegates decision-making authority to the agent (Jensen & Meckling, 1976). A challenge with the principal-agent relationship is that the principal and the agent share a self-interest (Jensen & Meckling, 1976). The manager and agent’s interests might not align with what is best for the organization (Jensen & Meckling, 1976). In the same manner, the manager and agent should align goals to help improve organizational competitiveness. Managers are concerned with not just their decisions when outsourcing but are aware of the agent’s agenda (Gunasekaran et al., 2015). The application of the agency theory is appropriate for exploring outsourcing during the preparation phase when selecting a vendor. The agency theory is not an appropriate conceptual framework because managers who develop plans when partnering with an outsource organization should focus on outcomes rather than reducing costs.

Outsourcing

Outsourcing is a strategy to reduce costs and improve a competitive advantage (Foerstl et al., 2016). The motivation for business process outsourcing changed to a manager’s focus on cost reduction in performance transformation in areas such as quality, functionality, and service (Handley & Angst, 2015). However, one of the reasons automotive manufacturers outsource is to reduce costs (Edvardsson & Durst, 2014). Management may benefit from developing strategies to partner with suppliers and determine how to compare the costs of performing the services internally or externally. The organization can gain a competitive advantage if managers focus on other challenges besides cost. Competitive advantage could yield positive results through streamlining processes and increasing profit. The increased profits may improve the organization’s competitive advantage (Lahiri, 2015). A strategic outsourcing plan could help managers cultivate a business relationship with suppliers.

In the 1980s, outsourcing manufacturing activities gained popularity as manufacturers searched for competitive cost advantages (Pearce, 2014). Several studies include using TCE during the implementation of outsourcing in manufacturing. TCE is suitable for managers to analyze outsourcing decisions (Cabral et al., 2014). Organizational decision-makers who apply TCE during outsourcing minimize transaction costs (Duan et al., 2014). Managers applied TCE as the theoretical framework to explore strategies that assisted them in proper business outsourcing implementations (Duan et al., 2014). The results from managers exploring strategies of proper outsourcing revealed the difficulty of determining what constitutes a successful business process. Outsourcing implementation and outcomes cause differences for managers in organizational environments and productivity and implementation capabilities. Managers should thoroughly explore the elements of the TCE theory before developing an outsourced implementation plan to assist with the process.

TCE focuses on transaction costs and may assist managers in implementing a strategy to reduce outsourcing risks (McIvor, 2016). An outsourcing strategy includes critical concepts from the TCE (Schermann et al., 2016). An outsourcing strategy’s key concept should include exploring the costs the organization would incur when outsourcing instead of using its resources (Coase, 1937). Managers’ ongoing exploration and monitoring of costs may help the organization determine if the outsourcing efforts should continue with a specific organization. Managers should understand the business activities that are essential to outsourcing. With process outsourcing, TCE is valuable for managers considering outsourcing (Schoenherr et al., 2015). TCE is synonymous with understanding the transaction attributes in outsourcing (Lacity et al., 2016). Managers undertaking TCE and RBV theories to perform outsourcing processes in a manufacturing firm may learn adequate outsourcing decisions (Neves et al., 2014). The TCE and RBV theories are good references for managers when deciding which activities to outsource (Neves et al., 2014). Applying the TCE theory alone is a reliable source for managers evaluating outsourcing transactions (De Vita & Tekaya, 2015). Managers evaluate outsourcing transactions through understanding transaction costs and ongoing monitoring of the outsourcing firm (McIvor, 2016). Applying the TCE in manufacturing helps enhance outsourcing efforts (Odin et al., 2023). Knowledge of business processes will assist in formulating the organization’s strategies and plans.

Another way that managers can assist with the organization’s outsourcing strategies is to build strong partnerships. A TCE-based outsourcing model is appropriate to assist manufacturing managers with enhancing competitiveness by understanding the steps necessary to follow up on outsourcing partnering decisions (Karatzas et al., 2017). When the managers at 969 manufacturing plants in 17 countries applied the TCE outsourcing model, the results suggested that decision-makers should look beyond the options to make or buy and address how to make outsourcing transactions successful (Yang et al., 2012). Still, not all leaders understand the difficulties in deciding on an outsourcing partnering strategy (Rousseau & Duchon, 2015). Managers should follow up with outsourcing firms to ensure completion of the transactions. Part of the strategy when following up with outsourcing firms should include verification that the finished product is reliable, and if not, then determine if the outsourcing firm’s team is responsive and flexible to rectify problems (Gunasekaran et al., 2015). Managers should establish a cadence of following up with the outsourcing firms.

Regularly following up with outsourcing firms may assist managers in gaining critical insights. Outsourcing is procuring components or services from an external source rather than producing internally (Mohiuddin & Su, 2013). Outsourcing for competitive advantage is a good decision. A statistical analysis of production outsourcing in manufacturing is appropriate to determine whether to outsource or produce internally using the results from the Manufacturing Performance Institute’s (MPI) annual census of manufacturers (Meixell et al., 2014). The annual census includes an analysis of the collection of plant-level data on manufacturing metrics, management practices, and financial results. The annual census data was appropriate to determine whether the manufacturing organization is competitive. In determining whether the manufacturing organization is competitive, the binary variable includes the extent of production processes outsourced (Meixell et al., 2014). Results suggested that outsourcing processes do not significantly affect the cost of goods sold (Meixell et al., 2014). The unexpected results were that managers admitted they did not anticipate that hidden costs may factor in the strategy when partnering with an outsourcing organization. When managers take the time to develop an outsourcing strategy, the efforts may help negate unexpected costs. When manufacturing managers implement an outsourcing strategy and include a high commitment to growth and cost strategy, they achieve high cost-related performance (Odin et al., 2023). The automotive manufacturing manager should continuously monitor the supplier’s performance.

Partnering with an outsourced organization varies in style and scope. Partnering with an outsourcing organization has four styles (Zhang & Sun, 2012). In style 1, select service outsourcing is outsourcing a single select service while keeping all other services in-house. Style 2 is when most outsourcing services occur while select services remain in-house. Style 3 is lower-level outsourcing, which includes outsourcing all lower-level services. In style 4, high-level outsourcing is all lower-level services, and employees are kept in-house, while high-level employees are outsourced (Zhang & Sun, 2012). The study results indicated that managers must conduct a practical cost analysis of what is suitable to outsource as a part of the strategy (Zhang & Sun, 2012). With a strong outsourcing strategy, managers may achieve organizational goals.

Managers need an excellent strategy to meet organizational goals during outsourcing. Outsourcing as a strategy is achieving operational plans and organizational goals (Valmohammadi & Ahmadi, 2015). Outsourcing is a global initiative that includes other trends. Other outsourcing trends include business process reengineering, strategic focus on core business, outsourcing and offshoring strategies, and shared services (Brunetta & Peruffo, 2014). Enhancement of organizational performance may occur through outsourcing (Giustiniano et al., 2014). Outsourcing is an organization’s most important strategic choice (Manning et al., 2015). The success of automotive organizations such as Ford and Toyota attributes to developing an effective manufacturing strategy (Chatha & Butt, 2015). TCE is significant when the organization aims to increase transaction costs and reduce production costs through outsourcing. The TCE theory is suitable for managers exploring the strategies automotive manufacturing managers use to partner with the appropriate outsourcing organization in this study. Managers may gain insight from the TCE theory and factor in the cost of transactions when developing a strategy to partner with an outsourcing organization.

Outsourcing became popular during the 1980s, and managers began to focus on vertical integration (Mong, 2013). Automobile industry managers must use vertical integration to reduce manufacturing costs and improve performance (Argyres & Mostafa, 2016). A manager should continue overseeing the process, whether a product is in-house or outsourced. With vertical integration, a manager should maintain ownership and control of the manufacturing process with the outsourcing firm (Williamson, 1985). Vertical integration may help to improve organizational performance. When management expands business operations, the notion of core competency emerges, and the belief that the managers should focus on the core competencies and outsourcing noncore activities (Mong, 2013). Core competence can distinguish a firm and include a competitive advantage within an industry (Peranginangin, 2015). An organization’s core competencies include product development, design, and engineering (Erenda et al., 2018). Some outsourcing strategies are relevant to core competencies rather than how outsourcing decisions affect business processes. When the manager focuses only on core competencies, this may cause the organization to become rigid and ignore other new capabilities (Gerbl et al., 2015). Noncore competencies, such as back-office functions, human resources, finance, and accounting, are some departments that outsource products and services (Gerbl et al., 2015). Some company managers misunderstand the word core, which leads to operational challenges and employee doubts (Pratap, 2014).

Manufacturing enterprises may reap benefits from the outsourcing of noncore activities from in-house (Wang & Li, 2013). Outsourcing non-core activities efficiently expands a firm’s capacity to address organizational competitiveness (Callahan et al., 2013; Mohiuddin & Su, 2013). From a TCE perspective, allocating resources efficiently reduces uncertainty (Giustiniano & Clarioni, 2013). An analysis of outsourcing decisions is a challenge. The results from an in-depth case study analysis of the outsourcing decisions in six German companies that employed TCE and the RBV as a theoretical basis could lead to critical learnings (Gerbl et al., 2015). These key learnings included those managers considered the organization’s competitive strength. The process involved the potential transactions associated with each distance option and an organization’s outsourcing capabilities and experiences (Gerbl et al., 2015). Managers should consider linking strategic outsourcing goals to concrete actions (Odin et al., 2023). The first goal is that managers should follow the outsourcing strategy created, and the second goal is cost reduction, which is the most frequently desired outcome of outsourcing (Brewer et al., 2013). Managers should not lose focus on the strategic reasons for outsourcing with any outsourcing organization.

A manager’s decision to produce a product in-house, outsource, or use a mixed strategy may affect the outsourcing decision. In a qualitative multiple-case study, managers reported that various strategies exist to determine whether to produce a product in-house, outsource, or do both (Nordigården et al., 2014). With a strategy to produce a product in-house, the organizational managers may have better control over their production and handling changes in product demands. When a manager’s strategy is to outsource, this may help them focus on other core competencies (Nordigården et al., 2014). Managers should continue focusing on the product once the decision to outsource occurs to ensure the product meets quality standards. Not knowing what processes are pertinent to an organization may affect outsourcing efforts. In a qualitative case study, a model is appropriate for managers to ascertain the relevant contextual information about business processes (Anastassiu et al., 2016). When managers apply the model, the conclusion is that attributes of business processes and essential activities emerge (Anastassiu et al., 2016). Adaptability may improve the organization’s competitive advantage when managers understand the relevant information about business processes.

Before analyzing potential disruptions in an organization, a manager should first understand the advantages and disadvantages of outsourcing. With the outsourcing decision, cost challenges may surface later because the manager minimizes the risks. Managers must properly assess all costs associated with producing a product before outsourcing (Handley & Angst, 2015; Timmer et al., 2015). Managers must not only minimize the risks of outsourcing. Managers must implement steps to monitor and manage supplier performance. Poor planning may lead to disruption of the organization. A disruption may include deteriorating the firm’s manufacturing competencies (Foerstl et al., 2016). Knowledge of the advantages and disadvantages of outsourcing is essential for managers. An advantage of outsourcing with the appropriate partner is the expectation of cost reduction. The advantages of outsourcing are cost reduction, increased productivity, job balance, management flexibility, and risk avoidance (Doval, 2016). Cost reduction is attractive to manufacturing managers because of the potential to reduce overhead (Pratap, 2014). Manufacturers in small-to-medium organizations that outsource can reduce costs and increase efficiency (Mohiuddin & Su, 2013). Improving process efficiency is a focus for managers in the manufacturing industry (El-Khalil, 2015). Automotive manufacturers sometimes arrange simulated models to identify how to improve efficiency in automobile assembly (El-Khalil, 2015). When managers applied the simulated modeling assembling to three different vehicles, the results indicated a potential return on investment of 497% and cost improvement of $1.6 million annually (El-Khalil, 2015). Although the simulated modeling indicated that outsourcing may improve efficiency and cost, no guarantee exists (Schepker et al., 2014). Managers who develop an outsourcing strategy may increase and improve the company’s productivity.

Other outsourcing advantages include streamlining business processes and organization competitiveness (Diaz-Mora & Triguero-Cano, 2012). The phases of streamlining the outsourcing process and estimated cost reduction are 20% to 40% (Holweg & Pil, 2012). The improvements during the streamlining of outsourcing are (a) standardization of business processes and (b) reduction of any costs incurred by the organizations. Improving organizational competitiveness occurs when managers obtain a reasonable market price for transactions involved with outsourcing (Vitasek, 2016). Managers responsible for outsourcing need to understand business processes for the growth and success of the organization (Wong et al., 2014). Even though potential advantages exist when outsourcing a business process, managers should remain engaged. Outsourcing aligns with an advantage of organizational and operational strategies (Cesarani, 2014). Strategic and organizational outsourcing is an advantage because it decreases the activities conducted by management and allows managers to focus on core business activities (Cesarani, 2014). Although outsourcing advantages exist, acknowledging the disadvantages is essential. The disadvantages associated with outsourcing could emerge as a loss of management control of the functions within the organization and challenges with the outsource providers, such as poor quality or the inability to produce the products. Outsourcing may decrease the organization’s frequency of in-house production (Christ et al., 2015). The difficulty in monitoring products and decision-making with the transaction is a challenge for managers because of the perceived loss of control (Christ et al., 2015). Managers should specify who is responsible for outsourcing products or services to the external supplier (Chou et al., 2015). Managers are responsible for including clear expectations regarding the external supply partner and decision-making in an outsourcing strategy, which may help ease managers’ apprehensions concerning the loss of control.

Another disadvantage of outsourcing may occur when the organization becomes dependent on the supplying partner (Awasthi et al., 2016). Obstacles occur when managers rely on an outsourcing supplier to perform the work, and delays occur in the delivery of products. The root causes of delays may include a natural disaster or the inability to complete the outsourcing functions promptly. The delays may negatively affect the organization’s financial performance (Christ et al., 2015). Other disadvantages include declining employee morale and the inability to monitor supplier performance (Krstic & Kahrovic, 2015). Managers should not ignore the potential disadvantages of outsourcing. The disadvantages include a dependence on the supplier, a decline in employee morale, and a lack of visibility in the supplier’s performance when preparing an outsourcing strategy. Before a manager implements business process outsourcing, developing how to partner with the appropriate outsourcing organization is essential (Kaipia & Turkulainen, 2016). Understanding the cost of outsourcing is vital for managers partnering with an outsourced organization (Lacity et al., 2016). When comparing outsourcing contract options, manufacturing managers must analyze the final process cost and uncertain demands (Nosoohi & Nookabadi, 2016). An outsourcing plan should include the cost suppliers will charge and an estimate of the uncertainty costs (Nosoohi & Nookabadi, 2016). Similarly, managers must understand how to design, control, and measure outsourcing practices (Kang et al., 2014). Outsourcing may help organizational decision-makers to show more efficiency and cost-effectiveness (Mensah et al., 2015). When developing a strategy for outsourcing, managers must act attentive to cost information for products and services.

Understanding automotive manufacturing managers’ strategies for implementing outsourcing is vital research to explore (Drauz, 2014). Managers should identify the best strategic approach when implementing an outsourcing plan. For over three decades, U.S. manufacturers have outsourced as a corporate strategy to minimize manufacturing and production costs and focus on core competencies (Hartman, 2013). A manager should follow a strategic approach before implementing an outsourcing plan with a prospective partner to complete a thorough analysis of the business process and the outsourcing efforts that could reduce costs and improve production. Managers should consider whether outsourcing efforts will affect the organization’s core competencies and affect the organization’s flexibility (Odin et al., 2023). Managers who develop a strategy for selecting the appropriate organization before implementing outsourcing activities may achieve favorable results. An analysis of the business process designated for outsourcing is the first step to implementing a plan. Business processes are a logical sequence of interrelated tasks to achieve a successful organizational outcome (Xie et al., 2016). Managers could fail to identify the components of a business process because of the complexity of the processes (Haeri et al., 2014). Managers from automotive manufacturing organizations must analyze the resources involved in the business processes, which includes resources to perform related activities and produce the desired output (Haeri et al., 2014). Managers must designate which business process the organization will outsource before partnering with an outsourcing organization.

The next step that managers should take as a part of partnering with an outsourcing organization is to analyze whether the efforts will reduce costs and improve production as managers analyze whether outsourcing will reduce costs and improve production. Managers should define a clear outsourcing plan, determine the internal costs and processes, and identify known risks (Lacity et al., 2015). The decision to outsource is often the result of managers planning to reduce costs and improve production (Lacity & Willcocks, 2014). Although outsourcing in the manufacturing industry is a strategy managers use to reduce costs, the strategy may not improve costs or lead to a competitive advantage (Cai & Yang, 2014). Outsourcing of automotive manufacturing functions may reduce costs and improve production (Solli-Saether & Gottschalk, 2015). Managers should fully understand the implications of outsourcing automotive production to a supplier, particularly in a different country (Schmitt & Van Biesebroeck, 2013). When outsourcing facilities are not in close geographical proximity to the outsourcing organization, decision-makers must consider transportation and logistics costs (Yurii et al., 2021). Domestic companies are relocating and outsourcing automotive production activities to America because producing abroad is no longer a low-cost advantage (Pearce, 2014). The global automotive industry outsourcing approach is evolving toward a collaborative production strategy (Nayak & Sahu, 2014). The results from an exploration of automotive manufacturing plants in North America to determine how to improve production revealed that improvement occurs when managers understand the manufacturing processes (Abolhassani & Jaridi, 2016). Improving production may increase operational performance through reduced waste (Nieuwenhuis & Katsifou, 2015). Managers who improve production outcomes may develop an adequate plan to partner with outsourcing organizations.

The third step in the strategic approach for managers planning to implement outsourcing activities is to analyze the potential effect on the organization’s core competencies. Core competence refers to the organization’s survival tasks central to its strategy (Zangiski et al., 2013). A manager should understand the organization’s core competencies. Identifying the organization’s core competencies is essential before developing a strategic plan to partner with an outsourced organization (Boguslauskas & Kvedaraviciene, 2015). Most managers focus on the organization’s core competencies and outsource other nonessential processes (Brettel et al., 2014). During outsourcing, managers should analyze the organization’s core competencies. The last step in the strategic approach for managers planning to implement outsourcing activities is to analyze the role of outsourcing on flexibility. Automotive manufacturing flexibility is improving because managers can adjust and effectively use resources (Mendes & Machado, 2015). To increase flexibility, automotive manufacturers may outsource their production (Gorane & Kant, 2014). Several key factors relate to flexibility in automotive manufacturing (Mishra et al., 2016). The factors are (a) managers possess the ability to adjust and cope with environmental uncertainties, (b) technology enhances manufacturing flexibility, and (c) managers can obtain the number of parts from the outsourcing partner. If a firm outsources, production may improve when managers are flexible.

Manufacturing within the United States

The manufacturing industry is vital to the U.S. economy (Baily & Bosworth, 2014). Michigan people depend heavily on automobile manufacturing, accounting for 60% of North American light vehicle production (Rutherford & Holmes, 2014). Challenges exist for business managers using outsourced manufacturing (Presley et al., 2016). Qualitative research is essential to help manufacturing managers align with the challenges that exist for business operations (Narasimhan, 2014). The scope of this qualitative single case study was to explore the strategies that automotive manufacturing managers use to partner with the appropriate organization for outsourcing products or services.

Managers have a role in planning the outsourcing strategies in a full-service vehicle automotive supply network (Ciravegna et al., 2013). In a semistructured interview study, full-service vehicle managers were asked why they outsourced an entire product development and manufacturing process to an equipment manufacturer. The decision to outsource full-service vehicles occurred because of the high transaction cost of manufacture (Ciravegna et al., 2013). Whether outsourcing part of the manufacturing services of the automobile, managers should carefully review processes when partnering with the outsourcing organization. The advent of lean manufacturing has significantly boosted efficiency in the industry. By eliminating organizational waste, lean manufacturing enhances the quality of products and services (Martinez-Jurado & Moyano-Fuentes, 2014). Despite manufacturing trade deficits, the future of manufacturing is promising, mainly because of technological advancements. For example, automation of equipment and robots could substantially increase output (Baily & Bosworth, 2014). This shift towards automation and lean manufacturing is a testament to the industry’s continuous efforts to enhance performance and stay competitive.

The components of an appropriate manufacturing strategy include flexibility, quality, delivery, and cost (Birasnav, 2015). The dimensions of TCE could affect the components of a manufacturing strategy and minimize transaction costs, which is essential for production (Williamson, 1985). Understanding transaction costs and production is beneficial because of the transformation facing manufacturing. In the past, manufacturing organizations were unwilling to change production based on demand forecasts because the approach may lead to high inventory costs (Pollard et al., 2016). A multiple case study included 13 Canadian manufacturing managers who outsourced functions to determine whether the firm benefited from outsourcing (Mohiuddin & Su, 2013). The managers from the organizations reflected on whether outsourcing creates value and enables the firm to grow in the marketplace. The findings indicated that outsourcing benefited firms and improved the competitive advantage, but the 13 Canadian manufacturing managers did not release the financial data. However, the Canadian manufacturers identified benefits for the firms when outsourcing, but they could not conclude whether outsourcing resulted in profits (Mohiuddin & Su, 2013).

The quality component of TCE theory applies to the ongoing improvement of the manufacturing process and finished product. A report, Why Does Manufacturing Matter: A Policy Framework, includes strategies for strengthening and improving production through innovation that U.S. manufacturers implement to continue success (Helper et al., 2012). Manufacturing complexity involves delivery and cost components. Delivery and cost components in manufacturing are the time to get the product to the customer and reduce costs associated with production (Birasnav, 2015). Another study included transformational behavior’s direct and indirect association with manufacturing strategy (Birasnav, 2014). The managers shared that the latest technology in the manufacturing industry could reduce time and help to implement lean manufacturing practices. Next, managers empower employees to establish processes to address defect rates and improve quality (Birasnav, 2014). The trends for the future are innovation and speed to the customer (Jin et al., 2017). These future trends may minimize the products outsourced by manufacturing organizations (Rylands et al., 2016). Lean manufacturing practices may improve an organization’s capability to produce goods.

Outsourcing is a potential alternative to in-house production. While automotive organization managers see the benefits of lean manufacturing practices, outsourcing some assembly components of a car may reduce operating costs (Weber et al., 2016). Managers can use lean manufacturing efforts to improve quality, production, and continuous improvement (Ngambi & Nkemkiafu, 2015). The lean manufacturing strategies that managers can use for outsourcing are defining interdependent factors of the product and establishing a production plan (Sundar et al., 2014). Lean strategies could reduce manufacturing costs (Ghobakhloo & Azar, 2018). Similarly, managers in manufacturing organizations should adopt lean principles (Susilawati et al., 2015). Managers implementing lean principles look for non-value-added activities to avoid these activities from the manufacturing line. (Jasti & Kodali, 2016). Lean principles implemented by managers in the automotive industry could improve productivity and quality (Poksinska et al., 2017). A study included the functions involved in the vehicle production process and the impact of implementing lean principles (Bevilacqua et al., 2015). The results indicated a decrease in the average time to produce vehicles after implementing lean principles (Bevilacqua et al., 2015) and identifying the factors to consider when outsourcing trends in manufacturing and other industries. Managers can review an outsourcing strategy model to explore products manufactured through assembly and identify the processes involved in production (Chen & Xiao, 2015). An outsourcing partnering relationship may occur when managers understand the processes involved in producing, assembling, and receiving the finished products. Manufacturing managers need assistance making appropriate decisions when implementing an outsourcing strategy (Kumari et al., 2015). An example of a successful application of the outsourcing framework that managers may use is implementing strategies that align with the partnering outsourcing organization’s mission (Gunasekaran et al., 2015). Adequate knowledge of outsourcing compliments managers in making the proper decisions to produce good results (Rajaeian et al., 2017). Partnering with an outsourced organization is complex, so managers must understand the implications of their decisions.

Other automotive outsourcing strategies are emerging. A resurfacing strategy is modular outsourcing because of the potential to reduce transactional costs (He, 2016). A modular approach is a partial component of an outsourced product (Jacobides et al., 2016). The modular approach test includes a modular design and production to verify the cause-and-effect relationships between managerial and strategic benefits (Kupota et al., 2015). Product modularity in production might enhance managers’ ability to simplify manufacturing processes. Case study research regarding Fiat Auto emerges to comprehend modularity (Whitford & Zirpoli, 2016). The managers from Fiat recognized that production is an essential component of a strategic approach. Automation is another trend in the automotive industry (Tavares et al., 2016). Tests conducted on an automobile assembly line using a new, automated, in-line inspection system emerged to explore efficiency and capability (Scholer et al., 2015). The results from the assembly line tests indicated that automotive manufacturers could benefit from using these systems by improving productivity and saving costs, strengthening their position in global competition (Scholer et al., 2015). The improvements that resulted from the assembly line tests corresponded to the success of outsourcing (Handley & Angst, 2015). Improving productivity could help reduce transaction costs. Learning the appropriate cost strategies may help managers understand the cost of a transaction when strategizing the components of the organization’s outsourcing implementation plan with the appropriate partner.

The automotive manufacturing industry continues to grow (Ciravegna et al., 2013). A report from the staff of the United Nations Industrial Development Organization [UNIDO] (2013) suggested that revenue from manufacturing reached several trillion U.S. dollars with continued projected growth. Despite the growth in the automotive industry, managers will experience challenges. One challenge is creating environmentally sustainable products (Nieuwenhuis & Katsifou, 2015). Manufacturing managers should continue to embrace lean practices, which will aid in sustainability efforts and reduce waste (Lugert et al., 2018). Although the automotive industry is progressing, managers should continue analyzing lean data to handle changes in the manufacturing landscape (Lugert et al., 2018). Manufacturing organizational management could experience a competitive advantage through sustainability by reducing emissions of gasoline and diesel engines (Sabir & Irfan, 2014). Managers should consider the benefits of sustainable products like electric and hybrid vehicles. The future of automotive manufacturing in the midwestern region of the United States is promising because of potential new developments (Rutherford & Holmes, 2014). To continue this positive trajectory, managers should invest in the region’s strengths: automotive research and development. This strategic move could integrate the region into the global automotive manufacturing industry, providing a sense of control over the future. With the growth and new developments in the region, managers’ strategic aptitude in partnering with outsourcing organizations could play a crucial role. As outsourcing continues in automotive manufacturing, managers could stay ahead by paying attention to the changing demands of the industry (Scherrer-Rathje et al., 2014). By keeping abreast of industry changes, managers could contribute to the organization’s growth and feel empowered.

Automotive organizational decision-makers must experience outsourcing in the changing global market (Fuchs, 2014). As the industry undergoes globalization and technological advances, decision-makers who outsource will face challenges (Schulze et al., 2015). Not overlooking technological advances in domestic and international markets is crucial. Developing countries such as Eastern Europe, Russia, and China are poised to gain a competitive advantage through the changing product features in automotive manufacturing capabilities and technological advances (Schulze et al., 2015). Decision-makers should focus on understanding the outsourcing processes involved in manufacturing fuel-efficient vehicles (Wallington et al., 2017). The outsourcing production functions may contribute to the changing global market. Developed countries outsource production functions to other low-cost countries, which may improve the developed countries’ position in the global economy (Neilson et al., 2014). By staying informed, decision-makers can feel prepared for the industry’s changes.

3. Research Methodology

Research Method

I used a qualitative research method. The qualitative research method is appropriate for exploration (Goldberg & Allen, 2015). For this study, I explored strategies automotive manufacturing managers use to partner with the appropriate organization to outsource their services. A qualitative method is appropriate when researchers want to explore and explain a phenomenon (Bailey, 2014).

3.1. Participants

The participants for this qualitative single case study included automotive manufacturing managers within one automotive company in the midwestern region of the United States. The participants must know about the research topic (Starnino, 2016). The participant eligibility criteria included managers who use successful strategies to collaborate with outsourcing organizations, which aligns with the research question in this study. Difficulties exist when balancing a personal and professional perspective while gaining access to participants (Doykos et al., 2014). I established a working relationship with participants by sending them an introductory email explaining the intent and purpose of the study and reassuring them of confidentiality. Providing detailed study information to potential participants could influence their decision whether to participate in a study (Campbell & Goldman, 2014). I obtained participants’ email addresses from business cards from attending community and networking events. Participants who did not meet the criteria of having experience partnering with an outsourcing organization were not in.

3.2. Population and Sampling

The sample consisted of fifteen managers who work for an automotive manufacturing organization that uses successful outsourcing strategies in the midwestern region of the United States. Researchers use purposeful sampling to find participants who will provide rich information on a phenomenon (Robinson, 2014). When determining the research design, selecting the sample size is critical. The appropriate participants and the individuals selected should know about the research topic (Cope, 2014). Data saturation occurs when an individual collects data with validation from someone who knows the topic (Gentles et al., 2015). With a case study, data saturation occurs when no new categories, themes, or explanations emerge from the data (Marshall & Rossman, 2014). Data saturation is essential for a complete research study (Yin, 2014). For this study, data saturation included data collected from interviews, member checking with follow-up interviews, and reviewing public documents to ensure validity.

Conducting a Zoom telephone interview at a convenient time for the participants was necessary. Allowing a participant to select when the interview occurs may assist with developing trust and a comfortable environment (Connelly & Peltzer, 2016). The participants selected the interview time that suits their schedules and is free from noise and interruptions. Telephone interviews could appear less intrusive and align the power and control to the interviewees in scheduling (Saura & Balsas, 2014). I logged into the Zoom meeting by telephone and started the meeting. After an initial conversation with the participants, I selected the record and reminded them of the informed consent form. Prior to an interview, the participant should feel at ease (Drabble et al., 2016). I called participants 2 days before the interview to remind them of the interview structure and confirmed the time commitment.

3.3. Data Collection

I was the primary data collection instrument for this study. In qualitative research, the researcher is the primary instrument for collecting and analyzing data (Kaczynski et al., 2014). The data collection sources consisted of a review of public documents from the company’s website on manufacturing capabilities when partnering with outsourcing organizations, process review documents, and semistructured interviews with member checking. Documentation is a common source of evidence used in case studies (Yin, 2014). A document may include information from the company’s website and printed and digital material (Hancock & Algozzine, 2016). I reviewed public documents from the company’s website regarding the organization’s manufacturing capabilities. I used the company documentation available for public use to complement the data collected from semistructured interviews and member checking.

Interviews are essential to collect data in a case study (Yin, 2014). The secondary instrument for this study was an interview protocol. Interviews are appropriate for research when seeking to gain knowledge from individuals (Lewis, 2015). An interview format is suitable for qualitative research (Roeser & Kern, 2015). Using the same interview protocol aligns to ensure the semistructured interviews’ reliability, consistency, and validity. I used an interview protocol for this study to capture participants’ strategies when partnering with an outsourcing organization. Member checking ensures reliability and validity (Marshall & Rossman, 2014). I used member checking to enhance reliability and validity. Member checking enhances the validity of the research findings (Thomas, 2017), and the researcher can ensure the interpretation and accuracy of the participant’s responses. I applied member checking, followed up to repeat the questions, and confirmed the accuracy of the interpretations. Verifying accuracy may occur when participants can review interpretations (Birt et al., 2016). Member checking verifies the accuracy of the interview responses (Birt et al., 2016). Participants had the opportunity to member-check the data interpretation to ensure a correct explanation of the information they shared during the interview. Member checking is a process in which individuals seek accurate feedback from the recordings of what the participants stated during the interviews (Marshall & Rossman, 2014). Member checking is appropriate to allow research participants to review their interview responses for accuracy and contribute additional insight (Yazan, 2015).

Data Collection Technique

Methodological triangulation occurs with case study research, which includes collecting information from multiple sources to substantiate the same phenomenon, ensuring overall study validity (Yin, 2014). Methodological triangulation is a type of triangulation that may use two or more sources of data (Archibald, 2015). In the study, I used methodological triangulation with the data collection techniques, including interviews and public documents on outsourcing operations from the company’s website. Methodological triangulation in qualitative studies may include interviews, observation, and field notes (Carter et al., 2014). Multiple sources of data collection may allow for a greater understanding of the strategies to partner with outsourcing organizations. An individual could use methodological triangulation to present a comprehensive, detailed description of study results (Fusch & Ness, 2015).

The primary data collection technique included interviews by using Zoom meetings from my telephone, incorporating semistructured questions, and an interview protocol. Case study research is appropriate for collecting data from several data sources, including interviews (Yin, 2014). Handwritten notes on critical participant comments during the Zoom telephone interview occurred during each interview. Notes from telephone interviews can capture auditory cues such as pauses, anger, sarcasm, or curt responses (Oltmann, 2016). The cues may allow an individual to ask additional questions and ensure the retrieval of in-depth data from the participants (Cuddy et al., 2015). Case study interviews include a researcher asking questions in an unbiased manner with a fluid conversation (Yin, 2014). I actively listened to each participant and sought clarification when necessary. When the researcher encourages interviewees to elaborate and clarify answers, they may lead to the respondent providing relevant information to the research project (Holstein & Gubrium, 2016). The advantage of a telephone interview data collection technique is that individuals could feel comfortable communicating by phone (Carduff et al., 2015).

I used Zoom Cloud to record and capture the questions and responses with permission from the participant. Zoom functions include recording on mobile devices, desktops, and tablets with approximately 10,000 attendees. When recording interviews, participants should consent to the recording of the interviews (Oates, 2015). A smartphone’s voice recorder was the backup plan for recording if a problem occurred with Zoom. When conducting the research, individuals may use recording devices to facilitate a more explicit focus on the details of what participants say (Cumming, Strnadová, Knox, & Parmenter, 2014). Note-taking during case study research is appropriate (Yin, 2014). If there were an instance of a participant declining to have their interview recorded, I was prepared to utilize handwritten notes for the Zoom telephone interviews. For telephone interviews, background noise may cause distractions. The location of the phone interview may influence the interview’s tone if background noise exists (Witty et al., 2014). The participant determined the interview date and time. To encourage participants to share the strategies they use to partner with an outsourcing organization, I confirmed the commitment to the participants regarding the confidentiality of the research.

For this study, member checking occurred to help ensure accuracy. Member checking is vital in maintaining accuracy in a study (Cope, 2014). After each interview, I explained member checking and that I would schedule a follow-up member checking interview. I contacted each participant by phone within a week after the interview to review and validate their feedback to ensure an accurate interpretation of their responses to the interview questions. If the participant suggested changes to the interpretation responses, I incorporated changes and kept the initial response. Member checking is participant verification to improve accuracy, credibility, and validity (Harper & Cole, 2012). Document review includes reviewing relevant documents to support the exploration of a phenomenon (Rohwer et al., 2015). I conducted semistructured interviews and reviewed public documents from the company’s website. Company documents may appear as a good source of information on the topic of interest (Wieland et al., 2014). Case study research is appropriate for collecting data from several data sources, including interviews (Yin, 2014). A review of handwritten notes regarding critical comments from participants occurred during each interview. An advantage of using records from a company’s website is that the information is readily and publicly available (Gök et al., 2015). A disadvantage is that the company’s website may not always contain pertinent information (Glesne & Peshkin, 2015). Conducting a pilot study enables the researcher to gather information before conducting an extensive study, which can require much time (Henson & Jeffrey, 2016). I did not conduct a pilot study for this single case study.

Data Organization Technique

Managing and organizing data is essential in research (Sotiriadou et al., 2014). Reviewing the content of data results and appropriately organizing will align with the coding of themes during the analysis (Carter et al., 2014). Organizing the data includes the identification number that applies to each participant’s interview recording and notes. Note-taking during case study research is a recommendation (Yin, 2014). Although the interviewees can receive digital recordings, note-taking is just as beneficial during interviews (Yin, 2014). To ensure confidentiality, all notes and recordings contained the participant’s unique identification number. For example, the first automotive manager in the interview received labeling as AM1. The proceeding automotive managers interviewed received labeling from AM2 to AM4. Protecting the identity and confidentiality of research subjects is a critical component in research (McDermid et al., 2014).

I typed all interview responses into NVivo 11. NVivo 11 is a crucial software program in identifying themes from interview data (Bernard et al., 2016). NVivo software appropriately manages data in a case study (Cope, 2014). Data can align appropriately into NVivo software for themes and patterns across interviews (Haque et al., 2017; Markkanen et al., 2017). NVivo can include themes concerning participants’ interview data in qualitative research studies (Bell, 2014). I used a password-protected flash drive to transcribe interview responses, data from member checking, and data collected from public records from the company’s website. The flash drive, any handwritten notes, and consent forms will remain in a locked file cabinet for 5 years from the date of completion after the University Chief Academic Officer’s (CAO) approval. After 5 years, written notes will be shredded and deleted from the flash drive and computer.

3.4. Data Analysis

The four types of triangulations for case studies include data, investigator, theory, and methodological (Yin, 2014). Methodological triangulation involves using more than one kind of method to study a phenomenon (Palinkas et al., 2015). I used methodological triangulation for this qualitative single case study. Conducting the data analysis and providing a methodological triangulation included two data collection techniques. This study included semistructured interviews and a review of public documents from the company’s website regarding manufacturing capabilities when partnering with outsourcing organizations. In qualitative research, organizing, evaluating, and understanding hidden patterns align with the data analysis process (Bedwell et al., 2015). I sought to understand the descriptions and explanations and followed a 5-step data analysis process to identify and code themes from the data. The process of coding the themes includes (a) compiling data, (b) disassembling the data, (c) reassembling the data, (d) interpreting the meaning of the data, and (e) concluding the data (Yin, 2014).

The analysis of qualitative data involves unraveling the data collected. The first analytic phase was compiling data into a formal database. After each interview, I uploaded the transcribed data and the data from public records from the company’s website into NVivo 11. NVivo is a qualitative data analysis (QDA) computer software package that may improve research quality (Houghton et al., 2015). With NVivo, the researcher can manage and organize the data, facilitate the data analysis, identify themes, glean insight, and develop conclusions (Woods et al., 2016). NVivo is appropriate for a study that includes coding the data and developing themes or categories (Sotiriadou et al., 2014). A similar qualitative data analysis software is ATLAS (Sotiriadou et al., 2014). NVivo is user-friendly, unlike ATLAS, with little coding structure and does not include simultaneous use of the software by multiple users (Chandra & Shang, 2017). I used NVivo 11 as the computer software package because it aligns with the data analysis process for this study.

The second phase, disassembling the data in the database, comprised breaking down the compiled data into smaller fragments and coding. Data analysis will help provide themes and patterns (Marshall & Rossman, 2014). The third phase involved reassembling the data and seeing emerging themes and patterns. I analyzed the data collected for themes. Analyzing themes involves searching for a relationship between the data (Robinson, 2014). I continued to look for newly published studies and current literature relevant to the research. Exploring new research that becomes available could lead to an understanding of new themes (Jääskelä & Nissilä, 2015). Newly published studies could align with the findings of this study and reflect the results of the conceptual framework for transaction cost economics. Themes can align with the fourth phase, interpreting data. Understanding and becoming familiar with the data could lead researchers to interpret the data. The interpretive nature of qualitative research is essential to researchers in engaging conscientiously in a subjective perception of another person’s experience in the context of their own experience (Clark & Vealé, 2018). The final phase in data analysis is the conclusions. Conclusions could include the significance of a study’s findings (Yin, 2014). The findings correlate to the conceptual framework and transaction cost economics and to developing strategies that automotive manufacturing managers use to partner with the appropriate organization to outsource their services.

Reliability and Validity

As the vital instrument, I ensured dependability through member checking. Dependability includes the reliability and consistency of a study (Wood Jr. et al., 2014). Qualitative studies must include the trustworthiness of research through dependability (Anney, 2014). Following the direction of Wood Jr. et al. (2014), semistructured interviews with open-ended interview questions is the approach for all participants with the interview questions in the same sequence. Dependability ensures the integrity of collecting data and findings (Marshall & Rossman, 2014). This study included members checking for the accuracy of data collected from interviews to address dependability. Member checking is integral to the qualitative research (Birt et al., 2016). Member checking is the process by researchers to review the interpretation of the participant’s responses to support data completeness and interpretation accuracy (Marshall & Rossman, 2014). After the initial interview, a follow-up meeting was necessary to check the members’ reliability. Credibility, dependability, confirmability, and transferability are appropriate for quality case study research (Baillie, 2015). Individuals use the criteria of credibility, dependability, confirmability, and transferability for trustworthy research (Cope, 2014). Maintaining rigor when conducting research includes the criteria of credibility, dependability, confirmability, and transferability (Morse, 2015). Individuals conducting research should engage with participants, conduct member checking, provide thick descriptions, and develop a coding system to prevent researcher bias and flawed case study analysis (Morse, 2015).

The dependability process includes the data’s stability (Marshall & Rossman, 2014). I used member checking to establish validity within the data. Individuals conducting research can use member checking to validate the accuracy of the data collected during interviews (Birt et al., 2016). After the interviews, I scheduled a follow-up session with each participant. To ensure credibility, the research participants should review interview responses, interpret the data, and add comments to confirm or disconfirm interview responses (Birt et al., 2016). To achieve credibility, triangulation is appropriate for a qualitative single case study, as noted by Yin (2014). I used methodological triangulation to enhance creditability, including collecting data from interviews, member checking, and public documents from the company’s website. A rigorous interview approach is appropriate (Twyman et al., 2014). Through member checking, participants verified the interpretation of responses to the interview questions to enhance the credibility of the qualitative study (Cope, 2014). I collected data from semistructured interviews, completed member checking, used an interview protocol to maintain a consistent interview technique, and ensured credibility. I reviewed the automotive company’s website for public company documents on partnering with outsourcing organizations to enhance the credibility of the findings. The methodological triangulation of these two data sources enhanced the credibility of the results.

Transferability aligns with the degree to which the results of qualitative research transfer to other contexts with other respondents (Anney, 2014). To achieve transferability, I provided a detailed description of the study findings for future researchers. Detailed descriptions are sufficient for transferability in other settings (Robinson, 2014). Facilitating transferability includes providing a detailed description of the inquiry and carefully selecting participants for the study. Transferability occurs when the reader assesses whether the findings are transferable to their setting (Korstjens & Moser, 2018).

The confirmability of a study applies to whether the results receive confirmation and support from other researchers (Cope, 2014). Confirmability occurs when the study’s individual confirms the findings (Robinson, 2014). Using methodological triangulation, completing interviews and member checking, and reviewing public documents can enhance credibility and confirmability. Confirmability is appropriate when interpretations emerge and the findings come directly from the data (Cope, 2014). Addressing confirmability, I used the recordings from semistructured interviews and member-checking to ensure the data and interpretation reflected the participants’ responses. I continued conducting the semistructured interviews and reviewed documents until data saturation occurred. Data saturation is the process during the interview when the information from the participants encompasses the same data, and no new themes emerge (Fusch & Ness, 2015). Follow-up telephone interviews and member checking took place to ensure data saturation. Data saturation is critical to qualitative research, and researchers should continue interviewing until data becomes redundant (Saunders et al., 2018). Saturation may arise from collected data (Palinkas et al., 2015).

4. Application to Professional Practice, Findings, and Conclusions

The emerging themes occurred into each of the following five core thematic categories: (a) use various agreements for deliverables and flexible agreements, (b) assess supplier metrics prior to partnering, (c) establish trust and foster relationships with suppliers, (d) assess financial factors, and (e) assess capacity, efficiency, and reliability factors. The study’s findings apply to automotive manufacturing business practices in several ways. Automotive manufacturing leaders can apply the developed strategies to outsourcing arrangements. The study’s findings disclosed automotive manufacturing leaders’ views within one company regarding strategies leaders use for partnering with an outsourcing organization. Current and new automotive managers who are or are considering partnering with an outsourcing organization will need relevant information on how supplier agreements affect their organizations. Moreover, current and new automotive manufacturing managers may use the study results to develop additional criteria and processes for partnering with outsourcing organizations and reducing costs. The findings from this study may help current and new automotive manufacturing managers develop strategies that could lead to improved negotiations of outsourcing agreements. With the complexity of outsourcing, these findings might aid in improving the understanding of how outsourcing partnerships can impact business performance.

The findings from this study provide strategies for managers to partner with suppliers and determine how to compare the costs of performing the services internally or externally. Cost reduction is one of the motivations for an organization to outsource (Lacity et al., 2016). If managers focus on reasons besides costs for outsourcing, the organization can gain a competitive advantage. Findings from this study also demonstrate how outsourcing can affect efficiency gains. Efficiency is a component of the transaction cost economics theory and part of the strategy for partnering with a supplier. Seeking to understand the efficiency of the outsourcing organization is appropriate (Lashgari et al., 2014). Data from this study gave automotive manufacturing managers the knowledge to assess supplier efficiency.

Implications for Social Change

The study’s results may facilitate a positive social change as automotive managers incorporate successful strategies when partnering with an outsourcing organization. The findings revealed that automotive manufacturing managers and suppliers collaborate to seek creative solutions when problems arise. Creative solutions may add value for other organizations to build relationships and partner with suppliers. One of the participants shared that the automotive manufacturer convinced the local transit agencies to add new bus schedules when a supplier was having difficulty hiring for a new shift. The new bus schedules allowed the supplier to hire individuals and fulfill their production agreements. Outsourcing may also impact social change by increasing overall efficiency by distributing tasks to people with the appropriate skill level for those tasks and letting highly skilled workers be more productive. Automotive manufacturers partner with suppliers to help provide additional skills by training their prospective workforces because they want to be ready for future innovation. The training is investing in individuals’ lives better, creating social change, and building sustainable communities.

Recognizing the proper handling of resources is beneficial when managing suppliers and product development (Hitt et al., 2016). Recognizing the benefits of handling resources can help automotive organizations gain a competitive advantage. The same strategies that will lead to competitive advantage will aid automotive managers in developing skilled workers and improving efficiency and manufacturing costs. The results of the study include details of how outsourcing allows cost efficiency. When an organization outsources across a range of suppliers, the outsourcing suppliers can improve the processes that lead to operating efficiencies. While the organization gains efficiencies, they also gain access to the outsourcing suppliers’ specialized skills. Access to the supplier’s practices can lead to sharing and training. As mentioned in the study results, the automotive manufacturing organization considers the work arrangements of the suppliers and is willing to invest in assisting with the development of their existing staff or within the community when circumstances demand.

When managers use these strategies, they may also affect social change by donating time and resources to local events or non-competing social organizations to benefit residents in the community. The use of effective strategies when partnering with an outsourcing organization may lead to (a) streamlining of internal processes and the elimination of waste from the automotive scrap material and (b) improve environmental sustainability for the community. Managers of automotive manufacturing organizations may have trouble when implementing sustainable manufacturing, but they should know that the potential impact of economic, environmental, and social implications outweigh any inconvenience (Stoycheva et al., 2018). Managers may continue to affect social change through their work with suppliers by reducing waste in the automotive manufacturing processes.

Recommendations for Action

The study results relate to business leaders who must partner with an outsourcing organization. Automotive manufacturing managers can implement the results to overcome the challenges of partnering with an outsourcing organization. The study findings revealed that using various and flexible agreements, assessing supplier metrics before partnering, establishing trust and fostering relationships with suppliers, conducting cost analysis, and assessing capacity, efficiency, and reliability allow for a favorable relationship with the supplier. Having an agreement for deliverables is essential for organizations that are considering outsourcing. A strong strategy around automotive operation is critical to ensuring capacity, efficiency, and reliability (Soleimani et al., 2018). If strategies do not exist within the company, managers should develop strategies to include agreement terms and conditions of what the supplier is expected to deliver.

Managers should develop and evolve supporting strategies to achieve the objectives (Benali & El Asri, 2016). Managers should also consider the roles and responsibilities of individuals involved with the deliverables. To ensure that the outsourcing partner delivers as agreed, managers also designate a sourcing manager to support the strategy for outsourcing partnerships. Including a sourcing manager in the strategy should enhance communication and supplier relationships. In addition, a sourcing manager may help to prevent possible risks to the organization and disrupt the outsourcing partnership. Approximately 75% of companies that outsource experience at least one disruption a year and most of the disruptions are caused by suppliers (Yoon et al., 2018). Proactively engaging with suppliers and assessing their capability will help develop solutions.

Limitations and Further Research

The first limitation was that the participant’s responses to the interview questions were self-reported, and they may not have recalled all the details relating to the strategies for partnering when outsourcing services. Participants not being able to recall past details can lead to bias. A recommendation for further research is to be aware that participants may not recall all details, and to minimize bias select an appropriate period for participants to recall details. A short recall period is preferable to a long one (Althubaiti, 2016). The second limitation of the study was that it focused only on one automotive manufacturing company. One manufacturing organization may or may not reflect the approaches of similar manufacturing organizations. A recommendation for further research is to include more than one organization to gain perspective on strategies used in other environments. Managers need knowledge of different sourcing strategies to improve organizational performance (Park et al., 2018). Another recommendation for future research is to use other methodologies and designs to further research managers’ strategies when partnering with an outsourcing organization.

Conclusions

There remains a need for investigations of the strategy dynamics in the automotive industry to generate positive outcomes (Damert & Baumgartner, 2018). Practical strategies for partnering with an outsourcing organization are essential for improving financial profitability. However, managers need to use various agreements for deliverables to partner with the appropriate organization to outsource their services and recognize when they must be flexible. This qualitative single case study revealed the importance of establishing trust and building relationships by automotive manufacturing managers’ planning to partner with outsourcing organizations. Establishing trust and building relationships includes effective collaboration, support, understanding the outsourcing organization processes, and getting to know their staff. Strategies to get to know the outsourcing organization staff include frequent interactions through site visits and becoming knowledgeable of their product. Trust is a critical partnership component and supports an environment of effective collaboration.

With the increasing demand for outsourcing, automotive manufacturing managers should carefully partner with suppliers. Not identifying the right supplier may lead to underperforming on their promises and providing poor quality work (Zhang et al., 2012). A key finding was conducting a cost analysis to assess an outsourcing organization’s financial structure. Automotive managers should evaluate whether the outsourcing organization has the resources and ability to meet production and deliver as agreed. The cost analysis is critical to the automotive manager if the expectation is to see efficiency improvement or cost savings because of outsourcing. To maintain organizational performance in the competitive economy, these strategies may provide strategies for managers responsible for partnering with outsourcing organizations to outsource services.

Conflicts of Interest

The authors declare no conflicts of interest regarding the publication of this paper.

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