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Transfer Management for Global Product Development Organization
Mälardalen University, School of Innovation, Design and Engineering.ORCID iD: 0000-0003-4077-6949
Mälardalen University, School of Innovation, Design and Engineering.
2011 (English)Conference paper, Published paper (Refereed)
Abstract [en]

Global product development has become integral to the way enterprises work today. The drivers for distribution work to global locations such India and China began with a focus on the significant cost differentials when compared to executing the work in western countries (Mao et al. 2008). Since then, the availability of talent (Lewin et al, 2009; Quelin & Duhamel, 2003) and accessibility of markets (Goldbrunner et al, 2006; Mao et al. 2008) have become equally important motivators.

 

The use of offshoring adds an additional layer of complexity to the already complex product development governance processes that companies use. Current literature discuss the offshoring or outsourcing decision (Levina & Su, 2008), describing organizational objectives for offshoring (Quelin & Duhamel, 2003; Lewin et al, 2009), guidelines for location choices (Cohen et al, 2009), deciding what functions to send offshore (Contractor et al, 2010) coupled with core competencies, as well as risks associated with offshoring (Lewin and Peeters, 2006; Aron & Singh, 2005). The offshoring process itself can be framed in terms of the decision to send functions (components, products, or services) overseas, progressing to planning and executing a transfer and iterating through the governance associated with operations. Since the vast majority of the literature focus on the decision stage of the offshoring process, or the governance perspective on existing globally distributed teams, there is still a need for understanding the process of transferring components and whole products. This papers aims to shed further light on that gap by describing the actual process of executing a successful transfer.

 The empirical foundation of this paper is a single in-depth case study of a new product development organization being established in China. We used an inductive approach that relied on qualitative and archival data to truly understand the dynamics of managing the offshoring of complex products and uncover the underlying mechanisms and structures. Given the paucity of literature and experience reports on transfers, an exploratory approach for collecting qualitative data was used. The primary source of data collection in this paper was interviews with key stakeholders within the projects at the general management and project management levels. We interviewed 15 managers from the Swedish and Chinese centres, and analysed archival data to gain a deeper understanding into both the sending and receiving side.

 The case enterprise, called Eurosoft, has a rich history of outsourcing to other suppliers, and was beginning to establish its presence in China. A strategic decision was taken by senior leadership to create an offshore organization in China that would assume complete ownership of one of their flagship products. Contrary to the conventional wisdom of having the same organizational structure replicated on the European and Chinese sites, Eurosoft chose to establish a product-centred organization on the China side. This paper will give insight to the context of transferring entire product responsibility for a mature product. While the strategies and motivations of distributing work across the product development life cycle have been debated in the literature, the question remains – how do you implement it?

 The case highlighted the key challenges that organizations face when handing an offshoring scenario. Even though Eurosoft Swedish centre was transitioning work to a sister organization within the larger Eurosoft enterprise, they faced hurdles with respect to establishing a common framework for carrying out the product transfer; communicating across cultural and national boundaries; having the receiving team demonstrate and feel comfortable with their competence; and dealing with the mismatch of organizational priorities in the two organizations. Eurosoft found that it was challenging to adhere to the transfer model when key resources from the sending side were often also focused on development projects unrelated to the transfer. When those projects ran into problems, the mentors from the sending side were unavailable to the receiving side. This introduces variability in the transfer process. While everyone recognized the importance of defining and locking the scope of the transfer, they found that scope creep occurred because a strategic roadmap was not articulated to the whole team. Furthermore, the number of interdependencies within a given product and between the products in the portfolio made it difficult to get consensus on the scope. The challenges that emerged in the case are consistent with that faced by project managers studied by Lacity and Rottman (2008). While none of these challenges in and of themselves are unique, the combination of the challenges in the context of a transfer project provides useful insights to both theory and practice.

 Based on the study, our recommendations to the practicing manager are to:

-          Establish a standard transfer model that clarifies transfer scope up front, and develop a governance mechanism to assess progress.

-          Ensure communication modes and interface mechanisms are articulated and agreed upon, and that training has been provided to address soft issues such as culture.

-          Provide dedicated resources to ensure effective knowledge transfer to the receiving team

-          Develop competencies in the receiving team across the four areas of technical, product governance, ways of working, and cultural commonality.

Place, publisher, year, edition, pages
2011.
National Category
Production Engineering, Human Work Science and Ergonomics
Research subject
Innovation and Design
Identifiers
URN: urn:nbn:se:mdh:diva-12258OAI: oai:DiVA.org:mdh-12258DiVA: diva2:417147
Conference
18th International Product Development Management Conference, Delft
Projects
Effective Outsourcing/Offshoring of Research, Development, and Engineering
Available from: 2011-05-16 Created: 2011-05-16 Last updated: 2017-03-06Bibliographically approved
In thesis
1. Organizational capabilities for managing the offshoring of product development
Open this publication in new window or tab >>Organizational capabilities for managing the offshoring of product development
2011 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Large multinationals must continually innovate to produce products and services that meet the needs of a global market. In order to distribute work across multiple sites, they use techniques such as offshoring and outsourcing. This requires them to address organizational and cultural aspects to coordinate distributed product development activities.  While these techniques have received great interest in business as well as research in recent years, as the latest trend is to send increasingly complex functions such as research, development and engineering (RD&E) overseas. When offshoring involves high value functions, the transitions occur rapidly, and the associated risks and costs of failing increase. In addition to the hidden costs of offshoring and outsourcing, there is a risk of losing core competences over time or spillovers of critical knowledge to competitors in the new market. Despite the criticality of succeeding with their offshoring efforts, little is known considering of how companies handle the process of distributing work globally, and the capabilities they develop to manage offshoring efficiently. The objective of this thesis is to explore the routines and capabilities that organizations´ need to develop to make offshoring an integral part of the management global RD&E.

 Two in-depth case studies are used to develop firm specific theories which can inform both the theory and practice of managing offshoring. Case A provides insight into a client-supplier relationship between the Swedish site of a multinational and its Indian service provider. The current challenges identified through the case study are paired with a retrospective analysis of the evolution of the decade-long relationship, to show how the cross-cultural interface has influenced the evolution of the relationship. With the assistance of a literature review, the findings are explained through the theoretical lenses of national culture, organizational culture and contextual factors. Case B provides insight into offshoring management in terms of a product management transfer from a Swedish site to a research center in China of the same multinational. Besides the insights into the transfer of responsibility for a complex product overseas, the case provides the base of an organizational capabilities framework for managing all stages in the offshoring process (decision, transfer, operations and governance stage). Four key capabilities were found to support the management of offshoring, namely; technological skills, process & tools, relationship management and knowledge management.

Place, publisher, year, edition, pages
Västerås: Mälardalen University, 2011
Series
Mälardalen University Press Licentiate Theses, ISSN 1651-9256 ; 138
Keyword
offshoring, outsourcing, product development, management, culture
National Category
Engineering and Technology
Research subject
Innovation and Design
Identifiers
urn:nbn:se:mdh:diva-12260 (URN)978-91-7485-019-2 (ISBN)
Presentation
2011-06-14, L348, Drottninggatan 12, Eskilstuna, 13:00 (English)
Opponent
Supervisors
Projects
Effective Outsourcing/Offshoring of Research, Development, and Engineering
Available from: 2011-05-17 Created: 2011-05-16 Last updated: 2013-12-03Bibliographically approved

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