Purchasing and Supply Organisation in Transition: An Exploratory Case of Offshoring Within a Global Engineering Company

The increasing global competition, declining product life cycles and high market uncertainties are making organizations rethink their operations. Offshoring is among the many strategies organizations are using to redefine their operations and grow market presence. However, it is still not clear which impact offshoring has on the organization’s purchasing and supply operations. This paper is about the changes in the purchasing and supply organization (PSO) as the process of offshoring production occurs. How new purchasing structures and practices emerge and (how) the old purchasing structures and practices are discarded. The paper draws from an empirical in-depth case study of a global engineering company. The company’s offshoring process is longitudinally reconstructed using both historical and current data, and then changes within its PSO are mapped from series of semi-structured interviews, observations and archival analysis. The preliminary findings suggest that the PSO changes dramatically when the company relocates production activities through the captive offshoring mode. However, these structural changes are somewhat intermittent but deterministically influenced partly by the offshoring process (e.g. product complexity, change of supply base, competence availability, etc.) and partly the environmental factors (e.g. host country legislation, market uncertainty, etc.).