Authors: Jörg Freiling
Despite several contributions in the last decade, the field of customer/supplier cooperation is still slightly under-researched. In practice, there are several new modes of inter-firm coordination which provide substantial improvements of both effectiveness and efficiency. One example among others is spatial supplier integration: suppliers erect plants at the customer’s site in order to improve collaboration. This case of close customer/supplier cooperation is termed as insourcing and belongs to the upcoming co-location arrangements in practice.One intention of the paper is to point out what insourcing is about. By the help of two case studies, one in the automotive component industry and one in the software industry, insourcing projects in practice are described and analyzed with regard to the experiences of the supplier. With the bilateral and the network coordination two different modes of insourcing could be identified.The findings of the case studies need to be analyzed in theoretical terms. Especially the resource- and competence-based perspective appears to be appropriate in order to explain the major difficulties and challenges of insourcing projects on the one hand. On the other hand, the competence-based view is useful in order to explain the key factors of the success of insourcing projects. The findings suggest that there are especially two different motives why firms make use of insourcing arrangements: First, the customer faces the problem of substantial resource gaps. Second, insourcing can be basic in order to found an effective learning partnership by resource pooling. The performance of insourcing arrangements largely depends on the absorptive capacities of the partners, the interconnectedness of assets, the asset mass efficiencies to be achieved, and the use of tacit knowledge.
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Publish Year: 2000
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