The Backsourcing Process – A case study

Abstract

This study examines the backsourcing process in detail. Previous research regarding backsourcing has mainly focused on the process before the decision to backsource has been made. Research regarding what happens after the decision has been made and the contract with the external supplier has been terminated, is rather limited. This is the starting point for this study. The research question is thus to examine how companies conduct the backsourcing process and identify different internal challenges that may occur during this process. A qualitative case study was used to describe the backsourcing process. The study involved one unique case of a supplier of maritime equipment in Møre & Romsdal. The case study included in-depth interviews with a selected number of employees and stakeholders. The interviews revealed important drivers, activities and challenges related to the backsourcing process. In addition, the interviews with the stakeholders revealed how the decision to backsource affected the case company’s competitive advantages from an external perspective. Based on the interviews, a framework as for how companies can conduct the backsourcing process was identified, consisting of four phases comprised with different objectives and activities. Moreover, three main challenges related to the backsourcing process was identified, namely limitations in capacity, re-building knowledge, and adapting the backsourced product to the production site. The findings indicate that all three challenges occurred during the third phase of the backsourcing process, which implies that phase three is a critical phase in the backsourcing process and imply that managers should pay particular attention to this phase. The main contribution of this research is the development of a stepwise model as for how companies can backsource. In addition to filling a gap in the existing literature, the framework can also be used as an analytic tool that might help managers in dealing with the backsourcing process, and the decisions and challenges related to this process.