Implications of outsourcing on operations planning: findings from the pharmaceutical industry

The purpose of this paper is to understand the implications of outsourcing at the operational planning level, i.e. how the operational planning function is complicated owing to the strategic outsourcing decisions that have been made in the past.

First, a literature review on outsourcing is conducted. Second, two case studies at three pharmaceutical companies are conducted to gather insights into the planning of outsourced operations.

The paper finds that nothing has been documented in the literature on outsourcing at the operational planning level. Moreover, a number of implications of outsourcing at the operational planning level are discussed. One of the main insights is that in an outsourcing relationship, the order process consists of different, hierarchically connected, decisions in time, hence requiring a richer and more developed communication and ordering pattern than is commonly assumed.

The results seem to be generalizable to the pharmaceutical industry. However, future research should determine whether these results replicate in other industries.

The literature on outsourcing has mainly focused on the strategic outsourcing decision. The paper contributes to a better understanding of the implications of outsourcing at the operational planning function, which has not been studied before.