Boeing included in study of failed outsourcing

Published 12:19 pm Wednesday, August 4, 2010

Businesses that cut their workforce or lean heavily on outsourcing are more apt to fail in the long-run, according to a new study released today.

The study, conducted by the University of Utah’s David Eccles School of Business, found that companies are more likely to fail if they outsource “components critical to their competitive position.”

“Firms need to look beyond production costs to other costs such as poor quality, delivery delays and risk of price increases by suppliers,” said Lyda Bigelow, a professor at the University of Utah.

The study cites Toyota and Boeing as examples of companies with problematic outsourcing strategies. More specifically, it points to Boeing’s troubles with the 787. Boeing officials have acknowledged they depended too much on some suppliers for the 787 and are pulling back some engineering work.

For more on the study, read this press release.