Uws UNIVERSITY

OF THE WEST OF
SCOTLAND

MSC DISSERTATION

PROCESS IMPROVEMENT OF EXTERNAL PAINTING

OUTSOURCING OF PHILIPS LIGHTING HAMILTON, UK

CHIGOZIE OKEKE

B00215396

MSC PROJECT MANANGEMENT

TABLE OF CONTENT
Acknowledgment…………………………………………………………………………………………………….........2

Abstract…………………………………………………………………………………………………………………..........3

Chapter one: 1.0 Introduction……………………………………………………………………………………......5

1.1 Project brief……………………………………………………………………………………………………..7

1.2 Company’s background……………………………………………………………………………………8

Chapter Two: Literature review……………………………………………………………………………..........10

Chapter three: Research methodology…………………………………………………………………..........30

3.1 Research strategy..............................................................................................30

3.2 case study research............................................................................................32

3.3 Research Approaches.........................................................................................35

3.4 Research paradigm & philosophy......................................................................37

3.5 research strategies adopted..............................................................................39

3.6 chapter summary...............................................................................................40

Chapter four: Findings…………………………………………………………………………………………….........41

Chapter five: Proposals…………………………………………………………………………………………...........46

Chapter six: Result………………………………………………………………………………………………….........58

Chapter seven: conclusion……………………………………………………………………………………...........66

References …………………………………………………………………………………………………………….........69

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 ACKNOWLEDGEMENT

I will like to use this medium to express my profound gratitude to many people that assisted me in this study. I would
like to thank the staffs of Philips lighting, Hamilton especially those in procurement and quality departments for their
kind assistance in accessing materials and their support throughout my ten (10) weeks internship.

I will also like to acknowledge the support provided by my supervisor during my time in Philips and during the time of
developing this work.

Finally I will like to thank God for his mercies throughout my studies in the university and my parents for their financial
support.

Thank you all.

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 ABSTRACT

This research is on the process improvement of the external painting outsourcing of Philips Lighting Hamilton
factory UK. The purpose of the study is to improve the external painting outsourcing of the company which
prior to this project was people reliant void of standardised process of way of work. This project involved
mapping out the company’s way of work with regards to external painting outsourcing and discovering gaps
that need closed to achieve high service levels, reduced number of missing parts, internal quality rejects and
enhance customer satisfaction.

However, for smooth mapping of the outsourcing process, the author worked out of the company’s factory in
Hamilton for 10 weeks where he had a hand on the process proper and brainstorm with people that are
directly involved in all the tasks that make up external painting outsourcing. Some techniques known as
process improvement tools & techniques were used to bring to book the true status of the external painting
outsourcing process. Some of the techniques are: process mapping, brainstorming, cause & effect diagram,
process flow charting and site visitation. In addition to the stated process improvement tools & techniques
used in the project, structured interview used in gathering information which featured the procurement lead,
lead buyer, warehouse supervisor and senior procurement officer.

"Robert Stake (1998) points out that critical to case study research are not means or methods of investigation
but that the object of study is a case". Thus, the improvement of external painting outsourcing process of
Philips Hamilton is a case and to that effect, case study research method was adopted as the research
methodology. Using this research method and the corresponding process improvement tools & techniques,
the following findings was made: the process need urgent improvement, the process was characterized with
missing parts due to stock discrepancies, lack of raw stock, suppliers not delivering on time, gaps in pick
process, late raw stock confirmation and finally the major issue being that the entire outsourcing process
relies on individual discretion no structured process or operating procedure for external painting outsourcing.

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In the quest to ameliorate / eliminate the challenges stated above, some proposals and recommendations
were made some of which are: Introduction of min-max stock levels for fast running raw stocks, introduction
of monthly stock count, introduction of consolidated delivery note, improved raw stock pick process and
enhanced labelling & packaging of raw stock.

The external painting outsourcing of the company was seen to have improved drastically overtime by the
implementation of the stipulated proposals and recommendation which were jointly made and agreed by the
key players that are involved in the painting outsourcing. This is reflected by simple analysis of missing parts
from start of the project in June 2013 to December 2013. This research is very significant in that it can serve
are a guide to future researchers and also be beneficial to the company as they can apply the same procedure
to improve other sectors of their business.

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 Chapter 1

1.0 INTRODUCTION

People see outsourcing from different perspective, while some look at it as the knight in shining armour of
their company/ business; others see it as an evil- killing tactic of management. Despite these mix feelings
about outsourcing, it still stands the taste of time as a good business management strategy.

Outsourcing however, is any undertaking, action or process that could be carried out by employees within a
business setting but in its place outsourced to a subcontractor or 3rd party as the case may be for a substantial
period of time. The functions that are outsourced to a 3rd party can either be executed at the prime
contractor’s premises or off-site.

The subject phenomenon is the process improvement of external painting outsourcing of Philips lighting
Hamilton, UK. Philips lighting outsource couple of their processes but this project is strictly on the external
painting outsourcing which is termed to be complicated as a result of the unique nature of the factory which is
known for accepting a minimum of one-piece order. This singular act makes the process too complicated as a
customer can place twenty (20) piece orders in twenty (20) different colours for instance.

STATEMENT OF THE DISSERTATION

The service levels of the company is below average with high quality issues, internal rejects and high amount
of missing parts from painting subcontractors. These problems were attributed to the way Philips Lighting
factory Hamilton works with its external painters which is dominated by stock discrepancies, lack of structured
confirmation process, inaccurate stock monitoring, and gaps in raw stock pick process etc. However, this
project is billed to look into the way Philips work with external painting contractors and identify possible
opportunities for significant improvement to the benefit of the end users and improved service levels.

Inferred from the literature review, companies go into outsourcing (outsourcing) as a result of the following
advantages of outsourcing process; cost and efficiency saving, reduced overheard, operational control, staffing
flexibility, continuity & risk management etc. but from the review of the current way of work prior to this
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project, the state of the outsourcing of the external painting is not cost effective, one of the main reasons for
customer delay, consistent internal quality rejects, low service levels, stock discrepancies, alteration in lead
time etc. To actualize the purpose and benefits of outsourcing, there became a herculean need to improve the
outsourcing process as regards external painting to one that will be cost effective, lead to high service levels,
reduced internal quality rejects and missing parts from painting suppliers.

BRIEF OVERVIEW OF THE DISSERTATION STUDY

Having reviewed the state of the external painting outsourcing process of the Philips Lighting factory using
applicable research approach and significant process improvement tools & techniques, some hypothesis and
proposals were made to mend the process significantly. However, there was a herculean need to improve the
external painting outsourcing process, the pick process need to improve, there was need to introduce monthly
stock count/check to ensure stock accuracy, need to consolidate delivery note irrespective of the warehouse
raw stocks are picked from, introduction of min-max stock levels for fast running raw parts, improving on the
raw parts packing /labelling prior to dispatch to subcontractors for easy stock identification and stock keeping
on the side of the contractors and most especially need to have a documented process in place to avoid being
peoples’ dependent rather being process reliant.

However, to be able to arrive at the proposals above, significant data collections methods were employed.
Primary data collection method was basically used to collect data though reference was made to some
relevant literature (secondary data) as a basis for the stipulated premise (hypothesis). Some of the primary
data collection methods used are: unstructured interview, series of brainstorming sections (which involved all
the team leads that have part to play in the external painting process), participant observation and site
visitations.

This research was not without some limitations as ten weeks of internship ideally was not enough to complete
this project and completely implement all the proposals, thus, time was the major limitation. Also human
resources and cost being in the forefront were also limitations to this project.

THE SIGNIFICANCE OF THIS PROJECT

This research is basically to improve the external painting outsourcing process of Philips lighting and it aimed
to solve or improve the epileptic way of work in the company as regards external painting outsourcing. The
project deliverables are to reduce the amount of missing parts from painting suppliers and also to reduce the
amount of internal quality rejects. The hypothesis and proposals made on this project were implemented and
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monitored leading to the process improving drastically from what it used to be prior to this project as
reflected on the daily missing parts analysis which recorded a drastic reduction and record of negligible
internal quality rejects.

More so, the proposals in this research work can be implemented in other sectors or operations of the
company’s outsourcing process other than external painting outsourcing. This work will also serve as a
reference to future researchers who will use it as a secondary source of information

1.1 PROJECT BRIEF

• Project title: Process improvement of external painting outsourcing of Philips Hamilton, UK

• aim Mapping out the current process for outsourcing (external painting) and determine the gaps that
need closed to achieve higher service levels and reduced quality issues

• objectives

 To reduce the amount of missing parts from external painting subcontractors

 To reduce the amount of internal quality rejects

 To improve the overall external painting outsourcing process to achieve higher service
levels

 To transform external painting outsourcing from being people’s reliant to process

based- by having a documented process in place.

• PROJECT DESCRIPTION: This project looked into current way of working with external painters and
opportunities for significant improvement were identified to the benefit of customers

• JUSTIFICATION: The performance of painting process is one of the main reasons for customers delays

Scope: This project covered only three external painting suppliers and is restricted to external painting
outsourcing as the company outsource some of its operations.

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1.2 COMPANY BACKGROUND

Gerard and his father Frederic Philips established Philips and co. in Eindhoven, the Netherlands and the
foundation of the company was laid in the year 1891. In 1895 that is a few years later, Anton Philips Gerard’s
brother strengthened the company. Anton as a great talented commercial developed the company to the
extent that the company was named the world largest light bulbs producer in the world. As a result of the
industrial revolution in Europe this stimulated the opening of the company’s first research lab in 1914. "For
the past years, the lists of inventions keep growing to include breakthroughs that continued to enrich people’s
lives". (Koninklijke Philips N.V., 2013)

Philips lighting

"Philips lighting is one of the three sectors within Royal Philips electronics, a diverse international
organization which was originally founded by Gerard and his father Frederic Philips. According to the 2012
annual report, the organization generated an astonishing € 24.8 billion in sales in 2012 across the three
sectors of healthcare, consumer lifestyle and lighting sectors".

"The lighting sector has grown to become the leader in the global lighting market accounting for a massive
35% of the organization’s total sales in 2012 which was €8.4 billion in 2012 financial year".

"With expertise in the development, manufacturing and application of innovative lighting solutions, Philips
lighting becomes a world market leader". "Over the past 121 years, the company has pioneered a lot of key
breakthroughs in lighting, which is seen as the basis for the company’s current strength and this guarantees
its position as leader in digital transformation". "Philips lighting aim to additional fortify its position in the
digital market by added investment in LED leadership while at the same time capitalizing on its brand
portfolio, distribution and brand in conventional lighting. Philips lighting addresses people’s lighting needs
across a full range of market segments. Indoors, Philips offers lighting solution for homes, shops, offices,
schools, hotels, factories and hospitals. Outdoors, Philips offers solutions for roads, (street lighting and car
lighting) and for public spaces, residential areas and sports arenas. In addition, Philips addresses the desire
for light-inspired experiences through architectural projects. Finally, Philips offer specific applications of

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lighting in focussed areas like the viticulture and water refinement". ( Koninklijke Philips N.V., 2013)

"Philips lighting covers the whole lighting value chain ranging from light source, luminaires, electronics and
controls to full applications and solutions – through the following business light source & electronics,
consumer luminaires, professional lighting solutions, automotive lighting and lumileds". ( Koninklijke Philips
N.V., 2013)

Philips lighting Hamilton

Philips lighting Hamilton is one of the eight lighting manufacturing and assembling factories in Europe and
also the one and only Philips lighting factory in the United Kingdom. This factory consists of two lighting
manufacturing sections – a lamp production factory and a luminaires assembly factory. Philips lighting
Hamilton has been in operation since 1947b producing Philips products and is now part of the professional
outdoor luminaries sector within the lighting portfolio. One clear important strength and unique aspect of
Philips Hamilton factory is that unlike other factories in Europe, this factory produce to a one piece minimum
order quantity and allows customers to fully customize their luminaire (customers place order in colours of
their choice). Although this uniqueness offers customers wild range choice of products, it is not without its
challenges within the supply chain department who are responsible for managing over 1000 individual
components which make up finished products. However, this singular act makes outsourcing operation
(external painting) of Philips Hamilton more complicated and vast. .( Koninklijke Philips N.V., 2013)

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 Chapter 2

2.0 LITERATURE REVIEW

Throughout the entire universe, rivalry is driving an increase in the level of outsourcing across industries and
so are the research efforts in academia. "Outsourcing influences the resource allocation to various business
units as well as the level of vertical integration of the organization" (Grant, 2002).

"Outsourcing also known as subcontracting is conventionally known as make- or – buy decision is the act of
contracting internal business activities to outside (either domestic or offshore) suppliers. In recent years, with
the escalating increase in global competition, outsourcing has changed entirely to become such an increasingly
popular option that there are few business tasks that have not been partially outsourced (Quelin and Duhamel,
2003; Johnson, 2006) with its far-reaching impacts, outsourcing is now considered as an umbrella term that
encompasses spectrum of external sourcing arrangement and its sheer diversity often causes confusion among
practitioners and scholars (sanders and locke, 2005). While the outsourcing literature has matured enough to
identify ‘’ which vendor’’ and where to outsource through some standard procedure (Chen and Chen, 2006;
lasch and Janker, 2005; Rese, 2006; Tseng and Lin, 2005), the serious issue about which business function to
outsource often invites serious deliberation (Insinga and Werle, 2000; Mccarthy and Anagnostou, 2004;
Engardio, 2006; Weidenbaum, 2005)" (Mike Johnson 1997)

A TOUGH PROSPECT – DEFINING OUTSOURCING

In a recent study, outsourcing HR services, the international business organization, and the conference board
gave their version – at least as far as human resource activity was concerned. To many employers, outsourcing
implies a transfer of an administrative responsibility to an outside organization an agreement that changes both
service delivery and internal staffing patterns.

"In information technology point of view, outsourcing means contracting out of any service by IT department

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which could range from having all of your development, maintenance and operations performed for you to
simply contracting an outside supplier to perform one single, simple task such as to write a programme or
install a piece of software. On the other hand, facilities management is just a subset of the outsourcing market
where an outside vendor runs your computer operation".(Mike Johnson 1997)

However, outsourcing can be defined as the practice of assigning part of the obligations and tasks under a
contract to another party known as a subcontractor. "Outsourcing is especially prevalent in areas where
complex projects are the norm, such as construction and information technology. Subcontractors are hired by
the project general contractor, who continues to have overall responsibility for project completion and
execution within its stipulated parameters and deadlines". (Mike Johnson 1997)

.."Outsourcing is something almost all big computer manufacturers do, but few admit. It’s like buying a frozen
pie for a dinner party to avoid the hassle of rolling out the dough; few chefs care to divulge that it’s not home-
made". - Jon Auerbach, The Bosten Globe.

….."The existence of a secret euphemism factory to which captains of industry resort when they require new
ways of downplaying the negative with silly words like" ‘’ outsourcing’’. – Russell Baker, The international
Herald Tribune

According to an academic book (Outsourcing in Brief by Mike Johnson, 1997), commentators such as John
Auerbach and Russell Baker, among others have managed to give the act of outsourcing a very mixed
reputation indeed as they have different view of the subject matter. They see and regard outsourcing
(outsourcing) as an act of firing local workforce to take advantage of cheap labour in other towns or country
contrary to the actual intention and meaning of outsourcing.

Seen by those outside business and many toiling on the lower slopes of the industrial pyramid as yet another
arcane devise thought up by heads of corporations to yield ever greater profits at the expense of workers and
middle managers, outsourcing as a concept is badly in need of some public relations. "In the majority of reports
– even those by business and management publications – outsourcing has been given a sort bad name and
merged together with downsizing and business process re-engineering (BPR) as a bad news, bad vibe fad that
while it may eventually go away is going to cause a great deal of death and destruction before it does". (Mike
Johnson 1997)

But while it may be looked at askance by many, outsourcing is too important a concept to be dismissed out of
hand as another way to enrich shareholders at the expense of workers. While it may well be true that majority

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of corporations base their first decision to outsourcing on the need to cut costs, it is a growing phenomenon
that – like other trends can work very well indeed if it is applied properly. For just as many business
professionals – especially those hard pressed to squeeze more profit and productivity out of their companies-
misread then concept of BPR and consequently only got to the downsizing part, outsourcing is not a quick fix.
Indeed the worst time to do it, many observers say, most companies start to implement or introduction of
outsourcing in their business when the profit starts to plunge. And in the process of using outsourcing to halt or
reverse a profit slide, outsourcing gets deservedly a bad name.

2.1 REASONS FOR OUTSOURCING

An institute for outsourcing which is the leading organization for the study of outsourcing which is based in
new York has shown that in the ever changing world of today, reasons for getting into this process of
outsourcing can be divided into tactical and strategic reasons The New York outsourcing institute executive
director by name, Frank Casale said ‘’ In our on-going surveys with our 1200 plus member firms, we see the
following reasons clearly defined.

TOP FIVE TACTICAL REASONS FOR OUTSOURCING

• Operating cost reduction / control: one of the important reasons for outsourcing is to ameliorate
drastically or put a good control measure to checkmate operating cost. Outsourcing to the outside
providers aim to take down cost structure, thus, cost reduction is one of the most captivating short-term
as well as long term advantages of outsourcing even in the midst of global economic meltdown cost
reduction is paramount in every business (Mike Johnson 1997). From interview conducted during my
review of Philips Lighting Outsourcing process, the core aim of the project is to reduce cost by
reducing internal rejects, cost of transportation of raw parts to and fro subcontractors and to improve
customer satisfaction which in turn improves income and reduce expenses.

• Making capital funds available for other core business function: Outsourcing makes way for the
reduction and total elimination of the need to invest capital funds into non-core business functions.
Thus making funds available for core business activities as other business functions that are seen as not
being part of the core business functions is outsourced to subcontractors. This makes capital funds more
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 available for core business functions. Outsourcing non-core business functions can also improve certain
financial measurements of the firm by eliminating the need to show return on equity from capital
investment in non-core areas. (Mike Johnson 1997)

• Unavailability of resources internally: A large number of companies outsource because they do not
have access to the required resources internally, thus they have to outsource to companies that have the
required resources and technicalities. In the case of Philips Lighting Hamilton, they only have the
resources for painting plastic materials internally (wet painting) but they don’t have the resources for
dry painting which is used mostly on metals and hence one of the reasons they subcontracted part of
their painting process called external painting. For instance, if a business unit is growing its operations
especially when it involve moving into a new geographic location, outsourcing is a viable and
important substitute to building the needed resources and capability from the ground up.

• Function difficult to manage or out of control: subcontracting is without doubt one of the best options
for carrying out business functions that difficult to manage or even functions that are totally out of
control. Outsourcing in this instance does not however, mean abdication of management responsibility,
nor does it work well as a knee-jerk reaction by companies in trouble. Rather, in a situation like this, a
company can subcontract such business function to another company that has the technical knowhow
and necessary resources to carry out such function as handling such functions will have a serious
constrains on time, cost and even quality.

"…. Outsourcing is being seen increasingly as a strategic goal and a very important part of the overall
direction of the successful organization" … CASALE

FIVE TOP STRATEGIC REASONS FOR OUTSOURCING

• Enhance business focus: outsourcing allows a company to focus on broader issues while having
operational details assumed by an outside expert (subcontractor). For most companies the single most
persuasive reason for outsourcing is that several of the ‘’how’’ type issues are siphoning off huge
amounts of management’s resources and attention. (Mike Johnson 1997). Outsourcing enhances a

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 company’s business focus when a company outsource some of its functions that are not core to its daily
operation and functions that are outside the company’s expertise. This will help the company
concentrate on key business areas.

• Creating access to world-class capabilities: By the very nature of most subcontractors’ specialization,
outsourcing providers bring extensive world-wide, world-class resources to meeting the needs of their
customers by subcontracting to companies that have world class capabilities and expertise to handle the
company’s key functions so as to create competitive advantage in the global market. Outsourcing in
this regards will create access to new technology, tools and techniques that organization may not
currently possess; better career opportunities for personal who transfer to the outsourcing provider;
more structured methodologies, procedures and documentation; competitive advantage through
expanded skills as stated by Norris Overton the vice president of re-engineering at Amtrak Partnering.
Mike Johnson 1997

• Accelerated re-engineering benefits: Outsourcing is often regarded as a by-product of another powerful

management tool called business process re-engineering (BPR). Outsourcing creates room and also
allows a business unit to realize instantly the expected benefits of re-engineering by having an outside
organization that is already re-engineered to world-class standard take over the process. Mike Johnson
1997. This yields accelerated re-engineering advantages.

• Shared risk: Risk is everywhere and risk is seen as part of business thus, there are terrific risks
associated with the investments an organization makes. When companies outsource they become more
flexible, more vibrant and better able to adapt to varying business opportunities. (Mike Johnson 1997).
Furthermore, business risk is shared between the prime contractor (the owner of business function) and
the subcontractor.

What business is saying to itself is ‘I know I could do these things if I had to, if I had the time to. But right
now, I’m u against the wall and it doesn’t make sense to do it myself when I can get it done better, faster and
possibly cheaper. Thus, the reasons for outsourcing is based having a business function done better, faster and
possibly cheaper by a subcontractor as the case may be.

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"Outsourcing is being seen less and less as a tactical cost saving drive and more and more as a strategic
direction that the organization" – Mike Johnson 1997

2.3 VICISSITUDES IN THE BUSINESS ENVIRONMENT DRIVING OUTSOURCING

Increase in the practice of outsourcing in external business environment of the twenty-first century has been
driven by a number of close related factors. Below are some of the factors that drive increased use of
outsourcing:

GLOBALIZATION:

For many years now, the external business environment has become all the time more global for most
industries. Most companies / business units now compete on the universal basis. "Regional agreement such as
the North American free Trade agreement (NAFTA) between the US, Canada and Mexico and the
development of the European market with a single currency have facilitated the development of trade on a
global basis. More and more, there has been a shift away from each other by trade blockades and distance and
time barriers, towards a system in which national markets are integrating into a single global market" (Hill and
Jones, 2001).

Increase in global market competition together with changing organisational structures has changed the
business environment enabling global competition (wirtz, 2001).due to the increase in global market
competition and unbridled quest for industries to compete favourable in the global market, many
industries resorted to outsourcing in order to maintain competitive advantage. There has also been
increasing deregulation in a range of industries including telecommunications, air travel and utilities.
The most significant effect of globalization for organizations has been the intensifying of competition
in many industries and it drives outsourcing so as the match the intensifying competition. R. Mclvor
(2006)

OFF SHORING:

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Offshoring is the relocation of a business function or process by a company from one country to another
typically an operational process like manufacturing. Offshoring is mostly driven by production cost – usually it
moves from high production cost area to low production cost area. Offshoring has been an important practice
for organisations for a long time. Particularly in the area of manufacturing. More recently, the trend towards
offshoring has been particularly pronounced in business services including areas such as telemarketing services
and software development. (Alden, E, and merchant, K 2004). For example, many organizations in the United
kingdom, United States and Australia have subcontracted considerable amount of their call-handling
undertakings ranging from after sale support to direct marketing. Much of this subcontracting has involved the
use of both resident call-centres and offshore call centres in a range of places. Organisations have pursued this
strategy of outsourcing for a number which includes production cost saving cost, high labour and access to
expertise or specialist service providers. In particularly, many organizations have outsourced telemarketing
related services to other countries in order to access service providers with much lower cost of labour. "Labour
costs in India account for around 30% of total costs in for a call centre whilst in the United states or United
Kingdom they account for around 70% of the total cost".(Khan, S 2003)

INFORMATION AND COMMUNICATION DEVELOPMENTS:

Developments in information and telecommunications technology have expedited the trend towards
subcontracting. The increasing significance of state-of-the-art communication and information technologies
(ICTs) for economies and societies has been driving substantial attention both from practitioners and academia.
The advancement of IVTs has been pressing forward at a speedier rate than many previous technologies.
"Some have agreed that the developments in ICTs can magnify brain power in the same way that the
technologies of the industrial revolution enhanced muscle power" (Woodall, 2000). In recent decades ICTs
have had serious effect on the way business is performed and the way in which organisations compete (Porter,
2001).

Information technology has significantly expedited the capacity of organisations to both international
production and access new market products. "In particular, the emergence of the internet, with its huge range
of prospective services and applications has led to a transformation of corporate strategy since the middle of
the 1990s as reflected in the more and more common use of terms such as industry convergence, virtual
corporations and electronic commerce" (Picot et,al 1997).

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PUBLIC SECTOR REFORMS:

Widespread reforms occurring in public sector organisations in many countries have really influenced the trend
towards increased outsourcing. In countries like united Kingdom and united states in recent time have pursued
radical reforms in public sectors and has at the heart of these reforms the use of competitive market
mechanisms.

There are arguments by group of people that assets and activities of public sector should be transferred to that
of the private sector for the sole purpose of performance improvement. However, the argument continued that
the public sector should be aspiring to be on the same frequency with private sector in terms of performance
improvement. Domberger (1998) discovered that outsourcing is now significant and its practice is on the
increase. However, much of the compelling force behind this prevailing trend has been the belief that the use
of competitive market solutions for service provision guarantees the achievement of best value. For instance,
the courage for higher application of market forces to the public sector in the United States was as a result of
Reinventing Government publication which lays emphasis on the merits of customer choice and competition as
a means of delivering better and more cost effective services to citizens (Osborne and Gaebler 1992). In
summary, the reforms in public sector leads to increase in the levels of outsourcing processes as the reforms
create avenue for industries to embrace outsourcing in order to satisfy their customers and also maintain their
business in the ever competitive global market. (R. Mclvor 2006)

INCREASE IN DEMANDING CONSUMERS

In many business sectors, consumers have become more fragile and demanding as they have become
more aware on issues such as price, reliability, availability and quality. Consumers demand more
customized product and service at a lower price also of a high quality. Consumers are much more mobile
in terms of ease of access to alternative sources of supply as a result of increased competition in many
markets and the advent of the internet. Consumer can access at from the comfort of their homes
customised and quality products and services at a subsidized rate as a result of the advent of internet and
globalization. With consumers becoming more sophisticated and powerful they will no longer settle for
whatever forced to be more responsive to customer need in a range of areas rather their choice is driven
by price, quality, reliability and availability. (R. Mclvor, 2006)

EVOLVING ORGANISATION STRUCTURE

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Growths in the structure of organization are having great implications on the way and manner in which
organizations are managed and structured. The rate of change and uncertainty in many organizations is
very likely to be on the increase as industries have to deliver more with fewer resources. In order to have
a competitive advantage in this so called business environment, industries must not only continue to
reduce cost but also concentrate on novelty activities that can enhance delivery of customer’s value and
as well create competitive advantage. However, changes in business environment are compelling
industries to move further from earlier paradigms of structuring and managing organizations such as the
mass production paradigm where industries preyed on a huge number of naive consumers. The manner
and approach in which many organizations meet the needs of their customers is highly influenced by the
principle associated with producing in mass otherwise called mass production. The most primitive
version of mass production targeted vanilla to further satisfy the needs of a good number of ignorant
consumers. The company was able to afford to adopt such a strategy as a result of the fact that consumer
was less informed in terms of ease of access to alternative sources of supply.

Gradually, the principles of mass production have become redundant in many industries as a result of the
factors like novelty, high level of competition, globalization and a more complicated customer. In view
of these, organizations have become highly proactive in achieving novelty that benefit the consumer
directly rather than the organization. With regards to the reforms in the business environment,
organizations have started to transform their organizations structure radically in other to create
competitive advantage. "Historically, many companies have adopted either a strategy of vertical
integration .i.e. make internally or subcontract (source externally) to bring the organizations products to
the market base on the relative advantages and disadvantages of each option. Many vertically integrated
companies have been discovered to be unable to achieve higher level of efficiency and of being
responsive to an ever demanding customer in a fast changing business environment". Keeping this in
mind, establishments have been compelled to embrace more organic structures in order to earn higher
level efficiency and reduction in costs. (R. Mclvor, 2006)

"These developments have generated the use of range of terms to expound the subject of evolving
organizational structures such as the network organization" Mile and Snow, 1986; Reich, 1991).

2.4 ADVANTAGES AND DISADVANTAGES OF OUTSOURCING

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Outsourcing is a strategic managerial process that strengthens quality, delivery, saves cost, increases
service levels etc. (Mike Johnson 1997) But it is not without its disadvantages which should be given
critical evaluation before jumping into outsourcing agreement.

ADVANTAGES

COST AND EFFICIENCY SAVINGS:

.many organizations are stirred by cost considerations in adopting outsourcing tactics. As an advantage
of outsourcing, outsourcing some of the business functions which are not cost effective and areas which
the organization considers as non-core business areas will improve business efficiency and reduce cost. It
is ideal to outsource what a company knows it can get done better by an external contractor and at lower
price than executing such business function internally. Thus, outsourcing as a business function creates
competitive advantage by improving cost and efficiency.

PERFORMANCE IMPROVEMENT

Many specialist suppliers can earn higher levels of performance in some functions than can earn
internally by the subcontracting company. The sound performance benefit is anchored not only in the
form of reduced costs. Specialist suppliers can equally provide the subcontracting company with
significant service quality. A major area of many subcontracting agreement is a service level agreement
which quantifies the service levels required by the subcontracting company. Maltz (1994) discovered in a
study of warehousing outsourcing that the main objective for considering and going into outsourcing
agreement by many organizations is to improve performance in a business function. In such scenario, the
subcontracting organization must make sure that it has in place an effective measurement parameter in
place to assess the performance level of suppliers on an on-going basis

SPECIALIZATION

Outsourcing is advantageous in that it can help an organisation to focus on business areas that drive
competitive advantage and sublet functions that are nonessential activities allowing the organization to
utilize the specialist skills of the subcontractors. Through wide-ranging outsourcing organisations have

19
formed networks of product and service providers specialising in their own distinct area of expertise. For
example, Quinn (1999) argues that specialists in supply markets can develop greater knowledge depth,
invest more in software and training systems, be more efficient, and therefore offer higher salaries and
attract more highly trained people than can the individual staff of all but a few integrated companies.
"These advantages can generate enough values to deliver a better service at a lower cost to the customer,
whilst allowing the supplier to make a profit. Furthermore, specialisation can have a positive impact
upon career development opportunities for employees. For example, in the case of employees in
specialist functions such as information technology in large diverse organisations, the scope for career
progression is normally limited to within a single function. However, there is evidence to show that
when the same employees are transferred to a specialist organisation there are enhanced career and
training opportunities". For example, Kessler et al. (1999) have found in a study of outsourcing in local
government that employees were much more positive about career development opportunities after being
transferred to the service provider. In a manufacturing context, this concept of specialisation has led
organisations to seek competitive advantage in the activity of specifying and integrating external services
and other purchases, rather than in assembly and production of the goods themselves. Many western car
makers have outsourced module assemblies such as chassis, climate control systems and anti-lock
braking systems to their suppliers. Many of these module suppliers locate in separate facilities near to
final assembly facility of the car maker. In some cases, these suppliers have established a direct
connection with the final assembly lines within the car (Fredriksson, 2002).

ACCESS TO INNOVATION

Outsourcing gives room for application of better solutions that will help a company to meet up with new
requirement, implicit need or existing market needs. This is as a result of effective products, services,
technology, processes or good ideas which come through outsourcing. Many businesses are very slow to
outsource as a result of the fear that the business stand a chance of losing the competence for novelty
overtime. Thus, in many supply markets the chances to influence the abilities of suppliers into the
customer’s product and services exist significantly. "For example, suppliers provide almost all Dell’s
component design, software and production requirements for its computers. It invests in areas where it
perceives an opportunity for unique value added avoids large inventory, facilities, and development risks
incurred by many of its competitors" (Quinn, 1999). Tesco, the food retailer, in pursuing a similar
strategy in its efforts to offer retail telecommunications services (Nairn, 2003). Tesco has subcontracted

20
almost all its operation to many service providers including cable and wireless for the communications
service, Servista for billing support and Vertex customer management for customer service. (R. Mclvor,
2006)

FLEXIBILITY

"In recent years past, many business units have tried to control greater part of their business activities
internally on the assumption that controlling supply sources eliminates the possibility of short-run supply
shortages or demand imbalances in product markets. However, such a tactic is both nonflexible and
intrinsically laden with risks". (R. Mclvor, 2006)

Greater flexibility can be achieved through outsourcing mainly in the sourcing of swiftly developing new
technologies or fashion goods. Specialist suppliers can provide greater responsiveness through new
technologies than large vertically integrated organizations. Thus, the consumer organization can swiftly
reduce or increase production in response to changing conditions of the market at a reduced cost having a
network of specialist suppliers.

CONTINUITY & RISK MANAGEMENT

Outsourcing will definitely make available a high level of stability to the company while dipping
drastically the risk that a not up to scratch level of operation would bring to the company and customer’s
engagement.

Evaluating many proportions of outsourcing benefits and its disadvantages presents a serious problem to
many industries with respect to their business. (Suhaimi et al, 2007). With regards to its key role in
business of the day as well as its complexity, outsourcing has as you would have thought proved to be a
well-liked topic for academic research in recent years. A very important concept in outsourcing creative
writing is the transactional cost analysis (TCA) which suggests that there are costs in using a market and
activities of the firm will be either kept in house or market- mediated, depending on asset specifying,
insecurity, the frequency of transaction and overall costs. (Anderson and Catigrion, 1986, Murray et al,
1995; Klein et al, 1990)

Outsourcing as a business tactic will help to keep organization into business and also create competitive
advantage in the global market and enable the organization compete favourable and maintain stability in
21
its business. Outsourcing high risk business activities will help an organization share its risk with the
subcontracting company and also have some its risk transferred to the company which is a good method
of risk management – risk transfer.

DISADVANTAGES:

Many are the advantages of outsourcing in this twenty first century global market. But despite these huge
benefits, outsourcing is not without some disadvantages which must be scaled together with the pros
before making decision on outsourcing. Some of the disadvantages of outsourcing are:

• Mortgaging the future: The future of an organization will be in jeopardy if an organization fails to
take a critical decision as to what to outsource, when to outsource and to whom. If an
organization makes mistake in this area, it can throw the future of the company into serious
problem as it might lead to lose of business and customers. Furthermore, if the organization fails
to make the right outsourcing decision, the secret of the organization might be compromised in
the long run which overtime might lead to business closure.
• Increased cost on items such as vendor selection and transportation and inventory: offshoring
which entails outsourcing from a prime contractor to a subcontracting in different countries might
lead to product price hick. Logistics problems are common in such situation as it impacts on the
overall operational cost which in other to keep the organization into business will lead to increase
in the cost of items/ products and services.

• Increased lead time: outsourcing can cause customer delay by increasing lead time. Lead time
which can be defined as the time duration between a customer’s order and the delivery of final
product can be uttered by outsourcing process. Some outsourcing processes involve rigorous
procedures that increase lead time which in turn leads to delay in customer’s orders.
• loss of managerial control: be it that a company signs a deal to have another company perform
the duty of an entire department or a single function or task as the case maybe, the company is
turning the management and control of that particular function over to another company. For
sure, there will be a signed contract, but the managerial control will belong to another company.
The subcontractor will not be driven by same standard and mission that drives the prime
contractor. One of the subcontractors driving factor is usually to make profit from the services

22
 that they render to the prime contractor.
• Hidden costs
Hidden costs can be said be to unaccounted cost of operations that accrued in the cause of
carrying out a business activity. Outsourcing agreement should state clearly who takes
responsibility of various cost that my accrued on the process as to avoid unnecessary cost
emanating from the process. Some agreement doesn’t take into account cost that may emanate
from the subcontractors side which falls outside the agreement. This hidden cost can impact on
the total cost of the item. This is one major disadvantages of outsourcing. (R. Mclvor, 2006)
• Threat to security and confidentiality: The life-blood of any business is the information that
keeps it running. Most outsourcing contracts have compromised the security and confidentiality
of some organizations. If you have payroll, medical records or any other private information that
will be transmitted to the subcontractor, there is a tendency that the privacy may be compromised
in doing so. Evaluate the outsourcing company carefully to make sure your data is protected and
the contract has a penalty clause if an incident occurs. If possible, assign a staff of the prime
contractor to work with the subcontractor to oversee and protect sensitive documents or data that
might be compromised in the course of the outsourcing operation.
• Quality problems: the subcontractor will be motivated by profit as it mostly the case as every
business aims to make profit and most times profit is a driving factor and not quality. Since the
agreement will fix the price, the only way for the subcontractor to maximise profit will be to
reduce expenditure in other to increase profit thus compromising quality. As long as the
subcontractor meets the conditions of the contract, the prime contractor is obliged to pay.

• Bad publicity and ill-will: outsourcing as the name implies brings to mind different things to
different people. If you live in an environment your friends and relatives lost their jobs to
outsourcing, outsourcing will been seen as a bad business tactic bringing bad publicity. On the
other way round, if your friends and relatives benefited from outsourcing you will see
outsourcing as a very good business strategy. But generally speaking, when people hear of
outsourcing they see it from the perspective of cutting down staffs and making them redundant.

2.5 PROCESS IMPROVEMENT

Many companies are striving to gain significant market share in fast growing global economy, and the
competition is so fierce. Customer satisfaction and quality are the core items on each company’s agenda

23
but so is the zeal to make profit. Core items on every company’s agenda are to satisfy its customers,
guarantee quality of products and also the zeal to make good profit. The unbridled quest for process
improvement has to start within i.e. internally by constantly improving business activities in every angle
as well as within the business environment to incorporate the changes in market requirement and
customers’ needs. Not all process improvement activities lead to increase in profitability as has been
noticed in recent times.

"Many companies have practised remarkable improvement in some of their business process, where the
improvement end point was next to none" (Hall et al, 1993). The questions now are; what is process
improvement? How does its accomplishment measured? in practice, what are the core drivers of process
improvement success and what are the root causes of its failure? (samai M Siha, germaine H. Saad
2008) Business process management journal vol 14.

A detailed definition by oxford is given as thus, process is a incessant and regular action or sequence of
actions taking place or carried out in a specific way. Process cut across departments and hierarchical
boundaries particularly in service industries thus, trying to reorganize or understand a process is not
usually easy. There are basically three types of process namely: strategic, enabling and operational
processes. (peppard, 1996).

2.6 TOOLS AND TECHNIQUES FOR PROCESS IMPROVEMENT

A simple knowledge of precise tools and techniques can be useful in understanding processes so that
they can be improved by applying a systematic approach and procedure. These simple tools and
techniques help to uncover the actual status of a process in other to make it better.

The tools and techniques most commonly used in process improvements are:

 Cause and effect diagram

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 process
material
No stipulated process
Availability of Raw
stock
No SOP regarding
painting Work relies
subcontracting

Missing materials

Custo
reject
Subcontractors not
delivering on time Delay in material pick by
material flow unit

Freight issues Internal quality rejects

External Internal

Figure 1. (cause and effect diagram of Philips Uk’s external painting outsourcing process)

Cause and effect diagram is a useful way of input mapping that effect quality. It is a useful tool for
opening up thinking in regards to problem solving. The above figure shows the cause and effect diagram
of Philips Hamilton external painting subcontracting. The causes of customer delays, quality rejects,
missing parts, low service delivery etc. are broken down into material, process, external factors and
internal factors. By looking at this diagram, you can be able to pick out what the situation looks like and
you can also see the impact of the factors outlined on the diagram on the external painting outsourcing
process.

• Process mapping:

25
To understand a process in order to improve it, process mapping is one of the initial steps to be used to
understand the process. Process mapping is all about construction of a picture of the activities that takes
place in a process for easy understanding of the process and also for information gathering. It helps
process improvement team to identify possible opportunities for improvement as it serve as a useful
communication tool.

• DRIVE

DRIVE is a process improvement tool an approach to problem solving and analysis. This is an acronym
which stands for Define, Review, Identify, Verify and Execute. It entails defining the problem scope and
stating criteria by which success of the study will be measured and also agree on the project deliverables
and success factors. Furthermore, reviewing the prevailing conditions and understanding the background
and identify possible improvement measures to the problem. Verify the benefits which the said or
proposed improvement will bring and finally implement agreed solutions and improvement.

• Process flowcharting

Process flowcharting is a useful tool which is also used for recording process activities in the form of
pictures exactly what is done in a process. It shows direction of flow of information using arrows and
standard symbols.

• Force field analysis

Force field analysis is a technique used in problem solving to identify forces which can hinder or help in
actualization of am change and improvement. Plans can be created to nullify the forces which may
prevent implementation of changes by assessing and identifying the forces.

• Brainstorming

Brainstorming as a process improvement tool can be combined with cause and effect technique in
problem solving. It is used in generation of a large number of ideas swiftly and may be applied in so
many situations. Brainstorming can be used to identify problem areas, improvement areas, solution to
problem designing and for action plans development. In this study, several brainstorming sessions were
conducted for easy development of action plans, identifying the problem areas and designing solution to
problem. It involved the unit heads of all the departments that make up external painting outsourcing

26
including subcontractors’ representatives.

The above outlined tools and techniques are employed used in process improvement discover the real
status of a process for swift improvement. They have been found to be very effective in process
improvement exercise.

2.7 BASIC PROCESS IMPROVEMENT MODEL

Basic process improvement model is a process model which tends to simplify and segments process
outline for easy and smooth flow. It has two parts namely: A process simplification segment and a plan
to do check act cycle (PDCA). The first part consists of steps 1to 7 while part two consists of steps 8 to
14.

Looking at the steps one after the other:

Step 1- this step entails the establishment of the improvement objective by selecting a process. This step
of the models is to select a process that needs improvement and establish its improvement objective.

Step 2 – having selected a process and establishing the improvement objective in step one, steps two is to
organize the tight team to carry out the improvement operation. For effective work to be done at the end
of the exercise, it is ideal to select the right team.

Step 3 – having built up the right team in step two, step three is to flowchart the current process thus,
generating a step by step map of the activities involve in the entire operation.

Step 4 – step four is to simplify the process and make changes where necessary by taking away
redundant activities the make the work simpler and easier to handle.

Step 5 – having simplified the process in step four, it is required to plan and develop a plan for data
collection and baseline data which will be used as basis for comparison.

Step 6 – In this step, the team is to create a control chart or run a chart out of the collected data above to
help understand the process better.

27
Step 7 – The team is to plot a chart to make comparison between the collected data in step five as against
the defined objective of the process improvement as outlined in step one. Most times, the simplification
actions in step four may not be sufficient to make the process capable of meeting the objective and that
will take the team to the next step.

Step 8 – in this step, the team starts to identify the root causes which prevent the process from meeting
the established objective. Here, the team can start up the plan to do check act cycle which is the part two
of the process improvement model.

Step 9 – This step is where plans are developed for the implementation of possible changes based on the
possible reasons for the process inability to meet the set objective.

Step 10 – step ten advises on the modification of the data collection plan developed in step five if need
be.

Step 11 – Here the changed process is tested and data collected

Step 12 – Assess the stability of the changed process as weather the process is stable or not. If the
process is not stable the team should return to its former state and plan for another change.

Step 13 – Verify if the changes improved the process. By using a histogram and data collected in step
eleven, the team can determine whether the process is close meeting the established process
improvement objective of step one. If the objective is met, the team can advance to the last step.

Step 14- Determine the feasibility of additional process improvements or better keep monitoring the
performance of the process until further improvement becomes feasible.

WHO IN AN ORGANIZATION SHOULD OWN OUTSOURCING PROCESS?

Outsourcing is a strategic tools for organizational change which to be effective, must be driven from the
very top of the organization (Mike Johnson 1997). It implies fundamental changes in strategy,
organization and people that can only be sustained by a top of the organization mandate. In most
organizations, we see the initial effort driven by a team commissioned by senior management; this team
is typically cross-functional and cross disciplinary (Mike Johnson 1997).

28
"Everyone has a stake in one or more processes. Groups of individuals usually share in and own the
activities which make up a process. But the one individual who is ultimately responsible and accountable
for the proper working of the process is known as the process owner. The process owner is the
immediate supervisor or leader who has control over the entire process from beginning to end". (Mike
Johnson 1997).

2.8 CHAPTER SUMMARY

This chapter discussed the literature survey as regarding the subject phenomenon. It gave a clear
definition of outsourcing as well as process improvement in addition to varied opinions of the term
outsourcing by different authors as many of them have mixed feelings about the term outsourcing.

Furthermore, the chapter cut across reasons for outsourcing which includes strategic and tactical reasons,
changes in business environment driving outsourcing (globalization, offshoring, public sector reforms
etc.), advantages and disadvantages of outsourcing, tools and techniques for process improvement as
well as the basic process improvement models. However, explained in this chapter is who is to be in
charge of outsourcing in an organization.

CHAPTER 3

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 3.0 RESEARCH METHODOLOGY

The main objective of this chapter is to describe in details the research techniques and tools that were
used in this dissertation to gain the desired result and also demonstrate the validity and reliability of these
choices.

Research methodology can be defined as the process used to collect data and information for the prime
purpose creating business decisions. The methodology may include publication research, interviews,
survey and other research techniques and include both present and past information.

However, the research method used is that of case study which can be defined as a "strategy for doing
research which involves an empirical investigation of a particular contemporary phenomenon within its
real life context using multiple sources of evidence". Robert Yin (1981, 1989). This method was adopted
because the subject phenomenon is a real life case (improving outsourcing process of external painting of
Philips Lighting). More so, primary methods of data collection in addition with secondary data were
used jointly to collect data.

3.1 RESEARCH STRATEGY

"A large number of research methodologies have been identified Galliers (1991) for example listing
fourteen while alavi and carlson (19920, reported in pervan (1994), use a hierarchical classification with
three levels and eighteen categories. In table 1 below, the author list the methodologies identified by
Galliers (1991, P.149), indicating whether they characteristically obey to the positivist or interpretivist
paradigms". Before the introduction of the methodologies used in this research, it will be ideal to discuss
the key features of some of the methodologies in table one below outlining their individual strengths and
weaknesses.

Scientific or Positivist Interpretivist or anti- positivist

Laboratory experiment Subjective or Argumentative

30
 Field experiment Reviews
Survey Action research
Case study Case study √
simulation Descriptive / Interpretive
Forecasting Future research

Table 1. ( list of research strategies)

Lab experiment permits a researcher to identify through a designed lab method applying quantitative
analysis techniques precise relationship between a small numbers of variables that are being studied
intensively with the sole purpose of making a statement that can apply generally to real life situations.
The limitation to the extent to which relationship identified exits in the real world is the key drawback of
laboratory experiment as a research strategy Gallies (1991).

Field experiment is an extension of lab experiment into real organizations and their real life situations
thus, huge realism is achieved and the extent to which situations can be criticised as contrived is
shrinking. In real practice, it is hard to actualize enough control to make replication viable and to identify
organizations that are ready to be experimented on.

Survey: survey uses questionnaire or interview to obtain information / data about a process, situation,
events or view at a point in time. After gathering information using survey, quantitative analytical
techniques can then be used thereafter to draw conclusion from the gathered information with regards to
existing relationships. Survey permits a researcher to study more variables at one point than can be done
in lab or field experiment. It is difficult to get to the backbone of the causes or processes involved in the
parameters measured using survey method and this forms one of the weaknesses of survey method.

Simulation: copying system behaviour is termed simulation. In a situation where it would be very hard to
normally solve problems by analytical methods which also involve the introduction of random variables,
simulation can be very much be applicable. There is no way simulation can be made to look like real
world events as with experimental form of research.

Forecasting and future research involves the application of time series and regression analysis to predict
the likelihood of future event. It tries to cope with the rapid changes taking place in global environment.
However, it is fraught with issues like complexity or how complex the real world events are and the
arbitrary nature of the future. It is hard to predict the exactness of the future as is only based on estimate.
31
Subjective / argumentative research: here, there is a strong chance of bias as is unstructured and
subjective form of research. But it is seen as a useful technique as new theories can be built on it.

3.2 CASE STUDY RESEARCH

There are so many significant articles recounting case study research approach of which this study made
reference to amongst the articles are Bebasat et al 1987 with its detailed definitions and proposals on
how case study research should be conducted. According to Bebasat, case study is considered to be
feasible for three main reasons namely:

• Case study is viable if the study entails studying the phenomenon in its natural environment.
• In other to understand the nature and the complexity of the on-going process, the research can ask
why and how questions for easy understanding.
• When conducting a research in area where few of such research have been undertaken in the
time past

In this study, case study is the best fit research strategy as the study is on improvement of external
painting outsourcing process of a UK based company. The author carried out this study as part of a ten
months internship in the company in Hamilton by working with the company for the said duration so as
to study the subject phenomenon in its natural environment. Furthermore, case study is viable here as the
researcher tried to understand the nature and the complexity of an on-going process as the research asked
why and how questions. In this instance, the company’s external painting outsourcing is an on-going
process. And more to the justification of case study as the research strategy, there is negligible research
on this subject phenomenon in the time past.

"A case study examines a phenomenon in its natural environment, engaging multiple means of collecting
data to draw together information from one or some entities like people, groups or organizations. The
limits of the phenomenon are not clearly evident at the outset of the research and no experimental control
or manipulation is used". Stone, 1978; Benbasat, 1984; Yin, 1984; Bonoma, 1985 and Kaplan, 1985. In
deciding whether to use case study approach attention should be given to some factors. Consider if it is
of any use to centre of attention on contemporary events or phenomena in a natural environment. If the
phenomenon is in a natural environment, case study approach is advantageous. Furthermore, case study
approach will be ideal if there is no strong theoretical base for the research, i.e. if it is a theory building
research project. A rich and natural environ can be productive ground for generating theories Benbasat et

32
al, 1987. As stated earlier, case studies require several methods of collecting data whose outcome
hopefully congregate, so as to set up assemble validity. Yin (1984. P. 78) identifies these methods as
including.

• Measurement of process related phenomena or direct observation

• The use of structured or unstructured interview
• Documentation, such as written, printed electronic information about the operation of the
company and the company’s profile.
• Data in recorded or in chart form about the previous use of technology that is relevant to the
subject case.

PRIMARY VS. SECONDARY DATA COLLECTION

Primary data can be defined as first-hand information, data observed or collected directly from first-hand
experience. It is collected from first hand and is usually seen as current and factual. Published data and
the data collected in the past or from other parties are called secondary data. Secondary data is historic in
nature and not seen as first-hand information.

However, this research work is made of both primary and secondary data. Primary data is used in
gathering information via brainstorming, interview, site visitations and observation of the outsourcing
process. Also, secondary data is used to review other writers’ opinion on the subject matter and to form a
theoretical background which serves as a backbone to this piece of work. More so, the secondary data
depicts critics on the subject matter. Two core primary data collection methods used in this study are
discussed in details below amongst others:

PARTICIPANT OBSERVATION

Participant observation is a very good research tool which gives a high level of insight on a subject
phenomenon as to capture the true situation or exact status of the case at hand. For instance at Philips,
staffs that play key roles in the company’s external painting outsourcing believe and confess that they are
on top of their job functions as they have been doing the routine job for an average of twenty years or
more. Employing participant observation on this situation, the author was able to ascertain the true
performance of the staffs in relation to the standard way of work.

33
Burgess made a suggestion that there are four identities undertaken for research purposes as regards
observations: participant as observer, complete participant, observer as participant and complete
observer. The method used is always a function of the situation at hand. He further stated that participant
observation unlike other approaches makes use of deductive method. Jorgensen, (1989).

Participant observation is a qualitative method according to De Walt (2002) which helps in gaining
understanding of the situation in view (Cassell and Symon 2005). A researcher is seen as complete
participant when he takes part in the activity without making his identity known. But in this research, the
research participated completely but his identity was not concealed, staffs were not able to alter their
behaviour or way of work as they believe they have enough experience and need to learn much about
their job. This gave the research the opportunity to gain full insight on the problems facing external
painting outsourcing of the company. According to the suggestion by Saundars et al (1999) teaches
expectations affects the behaviour of participants. According to Saundars et al (2009), participant
observation is more effective if used in conjunction with other qualitative research methods like
interview.

INTERVIEW

According to Kahn and Cannell (1957), interview is defined as a purposeful discussion between two or
more people on a subject matter (Saundars et al, 2009). Through interview, valid and reliable data can be
achieved and implemented. Basically, interview used in this piece of work is a face to face interview
which helped the interviewer to read both body languages of the interviewee as to ascertain the
truthfulness of the information being given by the interviewee. This is a good advantage of interview as
an approach to data collection.

The interview employed in this work is that of unstructured interview. It is informal in nature basically
used to explore some key information in depth. The interviewees were carefully selected to represent all
the departments or units that play roles in the external painting subcontracting of the company. Thus, the
procurement lead, warehouse supervisor (material flow), production supervisor, quality manager and the
production manager of one the painting subcontractors were interviewed to fill in some gaps that
participant observation and other methods of data collection used in the study could not fill.

It was suggested by saundars et al (2009) that location as a matter of fact may affect the data that may be

34
collected by the interviewer. The selected five persons were interviewed separately in the small meeting
up at the procurement department to avoid interference. In so doing, nobody except the interviewer was
able to hear the responses from the individual respondent.

3.3 RESEARCH APPROACHES

It is very important to choose the best fit research approach in order to gain more insight on the research
problem and come up with good and workable solution to the research problem. A good research
approach will help in actualizing the objectives of the research.

There are ways through which research can be approached namely:

• Quantitative or Qualitative
• Applied or Basic
• Deductive or Inductive

Research can be approached using any of the approaches listed above or a combination of a number of
approaches.

QUANTITATIVE OR QUALITATIVE

Quantitative:

The emphasis of quantitative research is on collecting and analysing numerical data; Quantitative
research concentrates on measuring the scale, range, frequency etc. of phenomena. It is more of
statistical approach to problem solving that entails manipulation of numerical data in order to arrive at a
logical conclusion providing solution to research problems. However, this type of research approach,
although harder to design at the initial stage, but is highly detailed and structured and results can be
easily collected and presented statistically. Quantitative research is all about manipulation of numerical
data in other to arrive at a logical conclusion.

Qualitative

Qualitative research is more subjective in nature than quantitative research approach and it involves
examining and reflecting on the less tangible aspect of a research subject for instance, values, attitude,
perceptions.

35
Although this type of research can be easier to start, it can often be difficult to interpret and present the
findings; the findings can also be challenged more easily. Actually, this research is more of qualitative
method. The research approach used is case study research method which is a qualitative research
approach.

BASIC OR APPLIED RESEARCH

The core aim of a basic research is to improve knowledge generally without any particular applied
purpose in mind at the outset. It is basic in nature without referencing any situation. It doesn’t apply to
any situation whether real or imaginary.

Applied: Applied research is mostly designed from the start to apply its findings to a particular situation.
This project (research) improving outsourcing process of Philips local suppliers ( external painting),
applied research approach is used as the findings and recommendations / proposals were applied to the
complicated / challenging outsourcing situation of the company in order to improve the process with the
aim of reducing internal quality rejects and improving customer satisfaction. The research is applied to a
particular situation.

DEDUCTIVE OR INDUCTIVE RESEARCH

Deductive research moves from general ideas/theories to specific situations. Deductive research tends to
narrow down broad ideas. While inductive research moves from particular situation to make or infer
broad general ideas/theories.

3.4 RESEARCH PARADIGM & PHILOSOPHY

"In every study research paradigm and research philosophy is a very important part of research
methodology for effective and appropriate collection of data. With reference to Johnson and Christensen
(2005), research paradigm is an aspect of research methodology that is based on the set of assumption
shared, concept, values and practices". However, paradigm can be defined as a function of way and

36
manner researchers think about the knowledge development. Furthermore, research paradigm however is
a combination of two ideas which are related to the pattern of world and the idea of the researchers.
Research paradigm is of good use in assisting researchers in carrying out their studies in an effective and
efficient manner. Johnson and Christenson (2005).

When research paradigm is mentioned, what comes to mind is the research methods and research
philosophies. The summation of these in a study helps the researchers to develop the in depth knowledge
and understanding of the research topic with regards to research paradigm there are various factors that
can influence the research to implement an approach in an effective way as time constraints, budget,
environment etc. The use of the right research philosophies and paradigm helps researchers to do away
with the fore mentioned factors from the study. There are three different terminologies of research
paradigm such as positivism, interpretivism and realism research philosophies – Mcnabb (2007).

POSITIVISM RESEARCH PHILOSOPHY:

This philosophy is based on how well and good the methodologies is structured to aid irrefutable and
also generalization of the observations and determine the outcome of the research by the help of
statistical methods. "This particular philosophy – positivism is basically employed in natural science as it
is a very critical and objective base approach. This is a method that involves different philosophy of
natural science as that of unchanging universal law philosophy and the view of everything that happens
in the nature". Saundars (2003)

A researcher can be able to collect all the facts and figures that are related with the research problems via
general sources with the help of positivism philosophy. According to Saundars (2003), the role of
researcher in this research philosophy is of an utmost importance for the research. Saundars stated that in
this philosophy, the role of the researcher is that of an objective analyst to evaluate the data collected and
produces the right and perfect result in order to actualize the research aims and objectives.

INTERPRETIVE PHILOSOPHY

This philosophy is of the view that the social world of business and management is far too intricate as to
be built in theories and law such as in the world of natural science. This philosophy- interpretive
philosophy is an embodiment of critical thinking about positivism philosophy. With reference to
interpretive philosophy, there stand a great meaning and truth a simple fact which are okay for every
research issues and situation. Johnson and Christenson (2010).

37
In the production of end result from the data collected interpretive philosophy plays a major role in order
to actualize this fit. The researcher does not interact with the environment alone in this philosophy but as
well seek to make sense it via event interpretation and the meaning that they draw from these. There are
lots of factors that affect the nature of individuals some of which are different standard of living, family
groups, personality difference in culture and social environment etc. With regards to interpretive
philosophy Saundars (2003).

REALISM PHILOSOPHY;

Realism as an important philosophy is anchored on the interdependency of beliefs and human values. It
has its focus on the existence of belief in the environment. Realism believes in the existence of external
and objective reality that influences people’s behaviour and social interpretations. This philosophy
believes that the objective for the study in the style of natural sciences is definitely not human. It also
explains how people as individual react towards a real world situation Johnson and Christensen (2010).

3.5 RESEARCH STRATEGY ADOPTED

In this project, the author took time to review many research approaches, methods and philosophies in
the long run qualitative research approach was adopted. Indeed, the author considered the fact that
quantitative research methodology is not significant in this project as it will not proffer more significant
information needed in the discovering the prevailing outsourcing status of the company as well as
provide improvement opportunities

Qualitative approach was adopted as the author needed to interact one on one with people that handle the
tasks that make up the full outsourcing process thus, mapping out the entire process to determine the gap
that need to be closed to improve the entire process.

However, outside these pronounced research methodologies, the author employed some useful tools and
techniques in the quest to understand the current outsourcing status of the company as well as build
insight on how to provide improvement opportunities. These tools and techniques used in addition to
qualitative research approach are called process improvement tools & techniques. These tools and
techniques are:
38
  Process mapping
 Problem solving technique, such as DRIVE
 Process flowcharting
 Force field analysis
 Brainstorming
 Pareto analysis
 Cause and effect diagram etc.

The outlined tools and techniques are preferred to any other methodology or approach as they are best fit
for the subject phenomenon. The process improvement tools and techniques were used in concurrence
with structured interview, observation and site visitation which are qualitative in nature.

3.6 CHAPTER SUMMARY

This chapter discussed the research methods which used in this research work Which includes research
strategy, approach, data collection method and the rationale behind the adoption of research
methodologies. With regards to research approaches, in terms of qualitative and quantitative research
approaches, qualitative method was preferred to quantitative as quantitative lays emphasis on collecting
and analysing numerical data which is not applicable in this research work. Also in terms of basic and
applied research, applied research which is mostly designed from the start to apply its finding to a
particular situation is adopted in this study. In order to improve the outsourcing process of the company,
the recommendations and proposals were applied to the complicated outsourcing situation of the
company in order to improve the process.

In this study, case study is the best fit research strategy as the study is on improvement of external
painting outsourcing process of a UK based company. The author carried out this study as part of a ten
months internship in the company in Hamilton by working with the company for the said duration so as
to study the subject phenomenon in its natural environment. Furthermore, case study is viable here as the
39
researcher tried to understand the nature and the complexity of an on-going process as the research asked
why and how questions. In this instance, the company’s external painting outsourcing is a continuous
and on-going process. And more to the justification of case study as the research strategy, there is
negligible research on this subject phenomenon in the time past

CHAPTER 4

4.0 FINDINGS

Inferred from the previous chapter, process improvement tools and techniques were used in addition with
qualitative case study research approach in order to ascertain the actual status of the painting outsourcing
of the company. Some of these tools are: process mapping, process flowcharting, force field analysis,
brainstorming, structured interview, site visitation, reviewing of the company’s data base, reviewing of
old project on the panting outsourcing etc.

Having reviewed the current painting outsourcing process using the stated approaches/tools &
techniques, the researcher/author was able to come up with the following findings:

4.1 Stock discrepancies:

There was a state of series of stock discrepancies between the subcontractors and the prime contractor
(Philips). Inferred from literature, one of the strategic reasons for outsourcing is to reduce cost and
increase profitability via enhanced delivery. The practice is that Philips warehouse some fast running raw

40
parts in the side of its subcontractors. There was a serious issue of raw materials warehoused in
subcontractors’ warehouses record huge shortage. The situation is that the record of stock with the prime
contractor as viewed from the company’s system via SAP differs from what subcontractors claims they
have physically in their possession. In some cases in order to maintain a clean sheet, hundreds of missing
raw stocked will be scrapped that means overwriting hundreds of thousands of pounds. This situation is
not in favour of one of the strategic reasons for outsourcing which is cost reduction.

4.2 Quality issues:

Quality Callouts 2013

100 100%
90 90%
80 80%
70 70%
60 60%
50 50%
40 40%
30 30%
20 20% callout reason
10 10% Pareto
0 0%

41
Figure 2 (The company’s quality callout for 2013)

There were series of quality related issues as regards painting outsourcing ranging from painting wrong
RAL colour, deep cracks, substandard painting (in the case of marine standard paints), rough edges etc.
And these lead to internal quality rejects and reworks.

No structured confirmation process /delivery note: there was no track record of raw parts sent to
subcontractors. No consolidated delivery note for subcontractors to signed as an acknowledgement of
receipt of raw stock. From the review of the current situation, it was traced that this is one of the reason
for stock discrepancies as materials on transit are not accounted for.

4.3 No defined process flow or methodology regarding outsourcing :

Painting outsourcing in Philips Hamilton is people’s dependant instead of process dependant. There was
clear evidence of people doing things as it come their mind. Process improvement is fundamental to
business management and is reliant on two things – the process and the people. In this instance, it is
wholly reliant on people no lay down procedure or process with respect to painting outsourcing and that
is why it is termed complicated. This make painting outsourcing a complicated function in the whole
system and it affects service delivery as it is one of the major reasons for customer delay.

4.4 No standardised minimum and maximum stock levels:

There should be standardised min-max stock levels maintained for fast running raw stocks to cub the
issue of material shortage. Inferred from one the site visitations, the representative of the subcontractor
emphasised the need to maintain min-max to reduce the problem of material shortage and save cost of
transporting material piece by piece.

4.5 Lack of inspection of painted materials from subcontractors:

Finished goods from subcontractors are stored directly in the warehouse without inspection. There is no
stipulated inspection procedure for finished painted material from subcontractors. Painted materials from
subcontractors are stored in the warehouse without proper inspection as to ascertain the quality of the
painted materials, colour conformity and actual quantity as stated on the purchasing order. This singular
act as reviewed has led to several quality callouts and customer delays as problem of quality & colour
discrepancies are mostly noticed during kitting on the production line.

42
4.6 No agreed stock count/ check between the subcontractor and prime contractor:

From the review of the current painting outsourcing status prior to the implementation of the stated
proposals on this project, there is not stock count or accountability measures with regarding to stock
between painting subcontractors and the prime contractor. In a situation like this, this should appeal on
the contractual agreement as at to when and how to carry out periodic stock check to ensure variations in
stock. Having a periodic stock check will project the importance of safe keeping of stock and enhance
material handling and stock keeping. The situation is that no agreed stock counts to ensure conformity of
stock and guide against stock discrepancy.

4.7 No stock record keeping of Philips raw stock on the side of subcontractors:

During a site visitation, it was discovered that the subcontractors have no track record of Philips raw
stock in their possession. The quantity and specifications of raw stock in possession of painting
subcontractor can only be downloaded via SAP from Philips as the subcontractors keep no single record
of stock in their possession they believe only on physical count when there is to. This is why there is no
accountability, frequent stock discrepancies, missing parts and material scraping. This has a cost
implication on the side of the prime contractor knowing that the materials in question are very expensive.

4.8 Subcontractors have no defined process for handling Philips contract:

Inferred also from site visitations, painting subcontractors have no defined process of handling Philips
contracts as stated earlier on the side of the prime contractor, they are people reliant as they don’t have a
lay down process of handling Philips contracts. There was a case where the supervisor of one the
painting subcontractors went on two weeks holiday, being the only person that plan how orders are to be
produced and also the only person that understand the flow of the contract, Philips suffered great delays
in productions, confirmation and delivery of painted products which reflected on the increase in missing
parts and poor service delivery.

4.9 Staff resistance to adopt a better way of work

It is normal to experience resistance whenever there is change (Susan Lee, Business improvement
Architect Canada). One of the challenges of the outsourcing process of the company was that staffs resist
change which is termed to be normal. It was discovered that majority of the staffs have worked in the
company for an average of twenty years and they are used to their normal trend of work. This makes

43
them resist process improvement plans as proposed by previous researchers on the subject matter. But
understanding that there will be resistance or there is resistance as the case maybe helped to identify its
source, reasons and modify efforts to manage the issues of change to ensure the success of the change
effort.

However, plans were put in place to reduce resistance to ensure smooth implementation of viable
proposals to enhance the external painting outsourcing process of the company. In the quest to reduce
resistance, parties that play roles in the external painting outsourcing were fully involved in the change
plans and were asked for their suggestions and have their ideas incorporated into the change plans.

4.10 Gaps in stock replenishment process (pick process)

Pick is designed to catch stocks (raw Parts) that are required for new orders within 24 hours after raising
a purchasing order (PO). Pick process is a stock replenishment process and can cause serious delay in
production line if not handled properly. It was discovered that the pick process was characterized with
communication problems between procurement and material flow (warehouse), labelling issues, picking
the right/ requested stock, and freight related issues.

4.11 CHAPTER SUMMARY

This chapter expounds the findings made after a critical review of the outsourcing situation of the
company. as outlined in this chapter, some of the challenges of Philips lighting external painting
outsourcing are: high level of stock discrepancies, quality related issue, no defined process flow or
methodology regarding the company’s external painting outsourcing, no standardised min/max stock
levels for fast running raw parts, lack of inspection of painted materials from subcontractors, no agreed
stock count / check between the subcontractor and prime contractor etc. Thus, this chapter provides a
detailed explanation of the challenges facing the external painting subcontracting of the company.

44
 CHAPTER 5

5.0 PROPOSALS

The outcome of the review of the current painting outsourcing, via the process mapping of the painting
outsourcing process. It was discovered that the outsourcing process of Philips Hamilton has many glaring
challenges which are causing customers delay and increase in missing parts. As stated from the previous
chapter, there is a clear spell of stock discrepancies, supplier not delivering in time and no raw stock for
outsourcing as depicted from analysis of missing parts (July / Aug 2013). However, the outsourcing
process is seen to be complex and unpredictable.

More so, it is a herculean task as inferred from the project deliverables to reduce the missing parts to the
barest minimum, to this effect some proposals were made to standardise the painting outsourcing of
Philips Hamilton so as to have and improved process that will be cost effective, reduced missing parts
and efficient deliveries to the benefit of customers and the company.

5.1 Introduction of monthly stock count

The introduction of monthly stock count amongst the prime contract and the painting subcontractors is
one of the outlined proposals made to curb the problem of stock discrepancies and stock inaccuracies.
This is designed to be carried out monthly amongst and across all the three painting subcontractors of

45
Philips Lighting Hamilton and is billed to ensure accountability of raw stock across all the painting
subcontractors.

The said monthly stock count is to be carried out by subcontractor in the presence of Philips lighting
staff at the subcontractors designated area of storing Philips raw parts every last Thursday of the month.
The count should include work in progress (WIP) and stock in transit. Philips staff going to
subcontractor for monthly count should go along with downloaded stock position on SAP from
procurement desk same day of the count. The downloaded stock position from Philips procurement team
will be used to match the physical count from the subcontractor and any discrepancy reported to Philips
warehouse supervisor for resolution and escalated to the appropriate quarter if failed to resolve in time.

If the monthly count is maintained regularly it will help to resolve the problem of stock inaccuracies
which accrued over time. More so, this will help to resolve stock related issues as they occur.

46
Figure 3 (designed template for the monthly stock count)

47
5.2 Proposed an improved pick process

Pick is designed to catch stock (raw parts) required for new orders within 24hours of new purchasing
order (PO) being place. Pick is stock replenishment process which aims to catch stock required for new
orders. However, from the review of the current painting outsourcing, it was discovered that there was a
gap in the pick process which need to be closed to improve this important task. Thus, the need for the
proposal of new improved pick process to enhance stock replenishment. From the review, material
picking has caused the company a lot of unnecessary cost in many ramifications some of which are
booking for freight two or three times to transport a single pick request due to the gap in pick process
which was void of transportation booking procedure to convey picked raw parts to painting
subcontractors. Another common issue with this task is not honouring a pick request or picking raw parts
and forgot to freight them to painting subcontractor

This proposal if fully implemented will enhance pick process as well as enhance stock replenishment
process which in turn will lead to reduced stock shortage or lack of stock as lamented by all the
contractors as one of the reasons for late supplies / deliveries. Also, this will help save the company a lot
of money by regulating transportation bookings and at large enhances the entire painting outsourcing
process to achieve the benefits of outsourcing.

48
Figure 4 (improved raw stock pick process)

5.3 Introduction of consolidated delivery note

The introduction of consolidated delivery note is one of the key proposals that if properly implemented
as stated on the standard operating procedure for the use of the delivery note, it will go a long way to re-
shape the painting outsourcing situation of the company. In Hamilton factory of Philips Lighting are two
warehouses called building 2 and building 3. The tradition is after material pick, pick request form is
attached on the packaged stock and dispatch to the painting subcontractor indicating the building in
which the raw stock was picked from. This practice has created a lot discrepancies as the subcontractors
has nothing to do where stock are picked from all they are after is material details (12NCs and material
description) and in most cases painting subcontractors find it difficult to reconcile stock that is sent to
them for production. The so called pick request form which is used as delivery note have no provision
where subcontractor can sign as an acknowledgement for the receipt of stock for accountability and
traceability hence the need to introduce a consolidated delivery note which void of the building where
stock is picked from rather consolidates both picks from building 2 and building 3.

In the consolidated delivery note are provisions for date, vendor (subcontractor) no, subcontractor’s
49
name, order number, delivery number12 NC, full material description and position where the dispatch
person will sign on behalf of the prime contractor and that for the subcontractor as prove of receipt of
stock. Also in the consolidated delivery note is a provision to record any delivery discrepancy for
immediate resolution. However, a standard operating procedure was documented for the use of this
delivery note as the painting outsourcing is moving from being reliant on people to process reliant.

Figure 5 (proposed / implemented consolidated delivery note)

50
5.4 Painting outsourcing flowchart

Confirm receipt of order

Transport to vendor Pick raw components Acknowledge receipt Send pick reque
with delivery note of pick request

Produce

Vendor returns Physically count and Booking L1 in SAP &

painted components confirm RAL physical

Kit & flow to shop Produce

floor

Scrap L1 part R.R.T

Reorder part

Figure 6 (Overall external Painting outsourcing flowchart)

The figure above shows a detailed overall painting outsourcing process flowchart as proposed in this
study to strengthen the entire external painting outsourcing process as well as having the entire process
documented in black and white.

From this proposal, the entire process starts from panning of production order with regards to external
51
painting to sub requisition of painted parts through creation of delivery at the end of production line. The
flow chart explains how to handle as situation where there is internal reject in the production line. Thus,
in such situation, the rapid response team RRT should be contacted to investigate why or reason for the
reject and get approval for parts reorder by varying all the necessary factors in order to work within the
stipulated lead time. The main aim of this proposal is to have a detailed flowchart covering the overall
external painting outsourcing depicting all the activities that make up the overall process and also have
the process in black and white to ensure people put a stop to the old way of work (working according to
individual discretion). This flowchart tends to make the company’s external painting outsourcing process
based and not people reliant.

5.5 Introduction of min-max stock levels for fast running raw materials

The introduction of min-max stock levels for fast running raw stocks was proposed to reduce the number
pick request per week as well as reduce the cost of transporting raw stock to painting subcontractors
regularly. This is a cost saving measure as well as a measure to enhance stock availability on the side of
the painting subcontractors to curb late deliveries and delayed orders.

In as much as the introduction of min-max for fast running stock is aimed to reduce regular material pick
and reduce the cost of transportation of material to painting subcontractors, it will help to monitor stock
the company’s stocks that are warehoused in subcontractors custody to reduce the reoccurring problem
of low stock accuracy and lack of stock for painting. This min-max is designed to be monitored via a
customised excel spread sheet which have a trigger that will highlight stocks that need replenishment to
avoid material shortages as claimed by subcontractors as one of the reasons for late delivery of painted
products. The introduction of this min-max will serve as stock control measure.

Philips Philips Philips Philips LPE LPE LPE Philips Agre Agre
Bo Sugges Sugges Sugges Sugges Sugges Sugges Sugges Sugges Agre Agre ed ed
x Pall ted ted ted ted ted ted ted ted ed ed Min Max
Material Qt et Min Max Min Max Min Max Min Max Comme Min Max Palle Palle
Material Description y Qty pcs pcs Pallet Pallet pcs pcs Pallet Pallet nts pcs pcs t t
Spigot check
44126000 SGP070 pallet/b
1303 complete 350 0.0 0.0 ox
HOUSING
44134001 OPTIFLOOD
1714 IP66 14 42 82 3.0 5.9 56 ok 28 56
44134001 FRAME
1723 OPTIFLOOD 60 120 240 2.0 4.0 180 ok 60 180

52
 IP66
MOUNTING
BRACKET Pallet
44134001 OPTIFLOOD qty not
2412 (A/R) 265 50 265 0.2 1.0 80 265 80
SHOULDER
44134001 PIECE
2742 OPTIFLOOD 60 720 60 180 0.1 0.3 ok ok 60 180
CDS480
44134002 Frame ZC
4911 RAW 130 130 260 1.0 2.0 ok ok 130 260
CDS480 Top
44134002 Cover ZC &
4921 CC RAW 4 56 168 392 3.0 7.0 112 224 ok 112 224
CDS480
44134002 Housing ZC
4931 RAW 8 80 160 10.0 20.0 40 80 ok 40 80
CDS480
44134002 Closing clip
4941 ZC RAW 147 147 294 1.0 2.0 ok ok 147 294
CDS480 Pole-
44134002 mount dia 60
4951 RAW 36 72 144 2.0 4.0 ok ok 72 144
CDS480 Pole-
44134002 mount ZC 76
4961 RAW 36 36 72 1.0 2.0 ok ok 36 72
CDS Pole
44134002 adaptor dia 76
5181 RAW 18 156 78 156 0.5 1.0 ok ok 78 156
CDS Pole
44134002 adaptordiam
5191 60 RAW 18 216 414 180 270
44134002 Classic Tophat
5201 RAW 24 120 240 5.0 10.0 ok ok 120 240
44134250 Torch cover
9441 RAW 324 no
C/BDS462
Modern
44134251 Tophat Top
1521 Disk 10714 50 30 50 0.6 1.0 ok ok 30 50
44134002 Mini Tophat
5211 RAW 5 40 20 40 0.5 1.0 ok 5 10
HOUSING -
44134002 Mini Optiflood
6151 (Unpainted) 4 80 40 80 0.5 1.0 ok ok 40 80
FRAME -
44134002 Mini Optiflood
6161 (Unpainted) 13 288 50 288 0.2 1.0 100 ok 52 104
SHOULDER
PIECE-Mini
44134002 O/Flood
6171 (Unpainted) 126 60 126 0.5 1.0 ok ok 60 126
Mounting
Bracket
44134002 MiniOptiFlood
6331 -Unpainted 25 325 100 325 0.3 1.0 ok ok 100 325
44134003 Bollard Flange 25 25 50 1.0 2.0 ok ok 25 50
53
 8091 Body (RAW)
44134003 Bollard Outer Pallet
8101 Rib (RAW) 268 70 268 0.3 1.0 200 qty? 200
44134003 Bollard Top
8111 Cover (RAW) 50 20 50 0.4 1.0 ok 20 50
check
44134003 Bollard Centre pallet/b
8131 Section 456 50 100 ox 50 100
44134003 Bollard Hatch
8141 Plate (RAW) 50 20 50 0.4 1.0 ok ok 20 50
CARTON
L1132xW353x
44131300 H371 C
3751 C0303 H 90 20 90 0.2 1.0 ok ok 20 90
44131300 Bollard fitting
3761 (flange) 81 81 162 1.0 2.0 ok ok 20 81
CLOSURE
CLIP WITH
WIRE
44113706 SPRING
5590 SGP060 R 720 1440

Table 2 (table showing the introduced min max stock levels for fast running raw stocks)

5.6 Highlighted the practice of appropriate raw parts packaging

From analysis of the current painting outsourcing situation of the company, raw stocks were not properly
labelled prior to dispatching to painting subcontractor for painting. This development makes it difficult
to identify raw stocks and also leads to material miss up. To reduce or eliminate this practice of not
labelling raw stock properly, the author highlighted the practice of appropriate raw parts labelling/
packaging to enable the people that have part to play in this task to abduct the right practice of packaging
and labelling of raw materials prior to dispatch to painting subcontractors. This entails having the
accurate 12NC and detailed material description clearly stated on the raw stock package before
dispatching to painting subcontractor.

In one of the site visitations conducted during this project, one of the painting subcontractor’s
spokesperson highlighted the need for proper labelling and packaging of raw stock to enable them
identify and store appropriately. In view of this development, the activities of the warehouse staffs was
kept under surveillance and it was discovered that they actually make the mistake of not labelling and
packing stock properly as highlighted by a painting subcontractor’s spokesperson.

The practice of labelling and packaging need to be standardised to reduce or eliminate the impact it may
54
on missing parts and also avoid delays on the timeline of purchasing orders. If a full implementation of
appropriate raw parts packaging is ensured, the problem of material identification and missing parts will
be ameliorated.

5.7 Documentation of SOP for the use of the proposed delivery note and monthly stock count. (In
the SOP are; process ownership and escalation procedure).

Two standard operating procedures where prepared and documented for the use of the proposed
consolidated delivery note and the monthly stock count. The main aim of this documentation is to move
from being people reliant to process reliant. Though in process improvement involves two things; the
people and the process but in this instance the whole process is people dependant. This standard
operating procedure if fully implemented will guarantee a uniform operation in the use of the delivery
note and the monthly stock count among all the painting subcontractors.

Below are the SOPs;

DELIVERY NOTE STANDARD OPERATING PROCEDURE (SOP)

The new delivery note process is owned by Flow Operator (warehouse building 3).

On completion of raw stock pick, Flow Operator in building 2 should inform Flow Operator in building
3 that pick is complete with details of materials picked and accurate quantities and number of pallets.

Flow Operator consolidates the delivery note with accurate picked quantities and corresponding
material details (Details copied from transfer order- SAP transaction LT21)

In case of insufficient stock to fulfil pick request, flow Operator should adjust quantity on delivery note
and adjust stock in SAP (return from vendor /block/scrap etc.)

Send printed & signed delivery note with physical shipment to subcontractor

Email delivery note to vendor and procurement planner on dispatch.

Save in relevant folder in dashboard using TO No as the file name

55
CREATION OF DELIVERY CONSOLIDATED DELIVERY NOTE

Log on to SAP

Key in transaction no LT21 (display Transfer Order: Item list) on SAP

Type in the TO number as displayed on the pick request form

Hold control key and press Y to activate copy tool

Select item, from qty & material columns respectively and paste on empty delivery note form.

Check for accuracy of the quantities and material details to ensure conformity.

Complete required fields on the delivery note (date, vendor, material document number and number of
pallets)

IN THE EVENT OF MATERIAL DISCREPANCY SPOTTED BY SUBCONTRACTOR

If a subcontractor notes a discrepancy (within 24 hours), procurement should contact Building 3 flow
Operator for investigation and resolution (within24 hours)

If the above actions are outside the time scales follow escalation procedure

MONTHLY STOCK COUNT STANDARD OPERATING PROCEDURE

PAINTING SUBCONTRACTOR’S ROLE

 Count carried out by subcontractor, in the presence of Philips staff every last Thursday of the
month.

56
 Philips staff should be present during stock count at the painting subcontractor for some months
until a clear evidence of reduced stock related issues

 Result returned to Philips on the following Monday by noon latest

 Count to include WIP (work in progress) and stocks in transit

PHILIPS ROLE

 Leann Lyons (Procurement) to download stock position first thing every last Thursday of the
month and hand it in to the Philip staff going to LPE for stock count

 Compare subcontractor’s count to the one downloaded on SAP

 Note discrepancies and share with the subcontractor for investigation

 Send count result to warehouse to investigate/resolve discrepancies

 Irvine Hugh and Daly Stuart (flow operators in building two and three respectively) to
investigate and resolve discrepancies within 2 days latest

 If discrepancies are not resolved with 2 days escalate to Mackenzie Scott ( warehouse / store
manager)

 Update SAP with the count after resolution of necessary issues

 Print and file for record keeping and referrals

57
Chapter summary

Chapter five discussed the proposals made after critical review of the external painting outsourcing of the
company. These proposals were made after series of consultations with the staffs that own some of the
activities that needed improvement so as to improve /salvage the overall outsourcing situation of the
company.

This chapter amongst other things discussed the proposed standard operating procedure for the use of the
consolidated delivery note and the monthly stock count which aim to transform the outsourcing to
process reliant other than the usual trend of people working out of their individual discretion. This
chapter pictures the samples of the proposed raw stock process flowchart, delivery note , monthly stock
count format and min max table format.

58
 Chapter 6

6.0 RESULT

The outcome of the proposals made on this project which is intended to close the identified gaps in the
painting outsourcing process of Philips Lighting Hamilton and improves the painting outsourcing
process. The result of this project will be viewed from the missing parts analysis and other observable
parameters as to whether the project is a success or not.

missing parts result sheet (missing parts analysis)

June July August Sept Oct Nov Dec

M1 - Stock discrepancy 80 81 42 19 9 9 6
P1 - Supplier not delivered on time 43 45 33 21 8 5 2
P3 - Incorrect Master Data 1 1 0 0 1 0 1
P5 - Spec Change action outstanding 1 0 0 1 2 0
P6 - No Raw Stock for Sub-
contracting 35 26 20 11 6 2 0
P7 - Other: Explain in Comment 4 2 2 2 3 1 1
Q1 - Quality Issue 15 12 6 6 3 2 1
S1 - Production order amended / 6 2 0 0 1 1 0

59
 Released early
S2 - Elephant Order / Unexpected
increase in demand 7 3 0 1 0 0 0
TOTAL 192 172 103 60 32 22 11

Table 3 (table showing the analysis of missing parts for the months of June to December 2013)

Table 3 above shows missing parts analysis for the months of June through December 2013. From the
table the total number of missing parts from the outlined measurement parameters for the month June is
192 and that of July is 172, 103, 60, 32, 22 and 11 respectively for the month August to December. From
the table, the missing parts are reducing overtime. At the month of December, the missing part drops to
11 as against 192 in June 2013.

Monthly stock count showing stock discrepancies (August 2013)

LPE
Physica LPE Stock Action Action
Material Description l Count SAP Difference Action HL01 Owner LPE
24110121400 CS3PL-M- Increase to vendor HI/SMc
5 99.401.8120.7 200 198 2 stock K
24220300033 CS2PL-M- HI/SMc
5 99.403.8120.7 400 298 102 Check HL01 stock K
44113706441 FRAME SGP060
0 RAW 71 71 0 No Action
CLOSURE CLIP
44113706559 WITH WIRE Increase to vendor HI/SMc
0 SPRING SGP060 R 1386 1374 12 stock K
44113707046 FRAME BGP060 HI/SMc
0 RAW 134 241 -107 Check HL01 stock K
44113707468 CANOPY SGP060 Decrease from HI/SMc
1 V2 RAW 2 3 -1 vendor stock K
44126000130 Spigot SGP070 HI/SMc
3 complete 699 776 -77 Check HL01 stock K
TC-E1-CN-XX-D
44130001094 Cambridgeshire Increase to vendor HI/SMc
1 FREE ISSU 782 778 4 stock K
TC-E1-CN-XX-D
44130001137 Cambridgeshire NON HI/SMc
1 F/ISS 4 37 -33 Check HL01 stock K
CARTON
44131300375 L1132xW353xH371 HI/SMc
1 C C0303 H 40 12 28 Check HL01 stock K
44131300376 Bollard fitting HI/SMc
1 (flange) 32 36 -4 Check HL01 stock K
44134001171 HOUSING
4 OPTIFLOOD IP66 86 86 0 No Action

60
44134001172 FRAME Increase to vendor HI/SMc
3 OPTIFLOOD IP66 209 208 1 stock K
44134001190 FRAME CLIP Decrease from HI/SMc
1 OPTIFLOOD 0 8 -8 vendor stock K
MOUNTING
44134001241 BRACKET HI/SMc
2 OPTIFLOOD (A/R) 111 84 27 Check HL01 stock K
44134001274 SHOULDER PIECE HI/SMc
2 OPTIFLOOD 148 170 -22 Check HL01 stock K
44134001302 CANOPY MOD HI/SMc
3 MILEWIDE RAW 0 15 -15 Check HL01 stock K
44134002119 HOUSING DBP523 Decrease from HI/SMc
1 RAW 0 1 -1 vendor stock K
44134002182 HI/SMc
1 Light tresspass Torch 0 8 -8 Check HL01 stock K
Return
to
44134002216 COVER SQUARE Decrease from HI/SMc Hamilto
1 DBP521 RAW 20 34 -14 vendor stock K n
44134002491 CDS480 Frame ZC HI/SMc
1 RAW 64 73 -9 Check HL01 stock K
44134002492 CDS480 Top Cover HI/SMc
1 ZC & CC RAW 276 461 -185 Check HL01 stock K
44134002493 CDS480 Housing ZC HI/SMc
1 RAW 49 86 -37 Check HL01 stock K
44134002494 CDS480 Closing clip Increase to vendor HI/SMc
1 ZC RAW 76 72 4 stock K
44134002495 CDS480 Pole-mount HI/SMc
1 dia 60 RAW 111 128 -17 Check HL01 stock K
44134002496 CDS480 Pole-mount HI/SMc
1 ZC 76 RAW 40 51 -11 Check HL01 stock K
44134002518 CDS Pole adaptor dia HI/SMc
1 76 RAW 112 99 13 Check HL01 stock K
44134002519 CDS Pole HI/SMc
1 adaptordiam 60 RAW 490 531 -41 Check HL01 stock K
44134002520 HI/SMc
1 Classic Tophat RAW 260 280 -20 Check HL01 stock K
44134002521
1 Mini Tophat RAW 0 0 0 No Action
44134002551 SRS419 Canopy Gore
2 V3 0 0 0 No Action
SRS419 Frame
44134002558 DUPONTVP-570-
1 85106 D62 0 0 0 No Action
Check HL01 stock/
SRS419 Canopy V3 Quality to confirm
44134002559 DUPONTVP-570- good parts and
2 85106 0 257 -257 Quarantined parts RC
44134002615 HOUSING - Mini HI/SMc
1 Optiflood (Unpainted) 49 31 18 Check HL01 stock K
44134002616 FRAME - Mini HI/SMc
1 Optiflood (Unpainted) 17 43 -26 Check HL01 stock K
SHOULDER PIECE-
44134002617 Mini O/Flood HI/SMc
1 (Unpainted 59 84 -25 Check HL01 stock K
Mounting Bracket
44134002633 MiniOptiFlood- HI/SMc
1 Unpaint 71 39 32 Check HL01 stock K

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 44134003001 CDS480 Top Cover HI/SMc
1 ZC & CC RAW P3 10 20 -10 Check HL01 stock K
44134003270 Classic Tophat
1 unpainted 10 10 0 No Action
44134003271
1 Housing CC RAW 10 10 0 No Action
44134003617 EMC plate top Large Decrease from HI/SMc
1 Iridium2 0 9 -9 vendor stock K
44134003809 Bollard Flange Body Increase to vendor HI/SMc
1 (RAW) 33 30 3 stock K
44134003810 Bollard Outer Rib
1 (RAW) 100 100 0 No Action
44134003811 Bollard Top Cover HI/SMc
1 (RAW) 28 25 3 Check HL01 stock K
44134003813 Bollard Centre HI/SMc
1 Section 66 60 6 Check HL01 stock K
44134003814 Bollard Hatch Plate HI/SMc
1 (RAW) 28 25 3 Check HL01 stock K
44134003815 Bollard Embed Body
1 (RAW) 28 28 0 No Action
44134003816 Bollard Embed Centre
1 Pipe 50 50 0 No Action
44134250944 HI/SMc
1 Torch cover RAW 0 27 -27 Check HL01 stock K
C/BDS462 Modern
44134251152 Tophat Top Disk HI/SMc
1 10714 39 20 19 Check HL01 stock K
44134251310 Gear tray LED Top Decrease from HI/SMc
1 Large Iridium2 0 5 -5 vendor stock K
Check HL01 stock LPE to
44130002118 check
1 Cover Square 24 0 24 12nc
Check HL01 stock LPE to
44134001141 check
1 Telensa 84 0 84 12nc
44130001122 Check HL01 stock Return
1 Telensa 30 0 30 to HL01

Table 4(Monthly stock count showing stock discrepancies (August 2013)

Monthly stock count showing stock discrepancies (December 2013)

LPE
Physica LPE Stock Action Action
Material Description l Count SAP Difference Action HL01 Owner LPE
No Action
24110121400 CS3PL-M- 199 199 0 HI/SMc
62
 5 99.401.8120.7 K
24220300033 CS2PL-M- No Action HI/SMc
5 99.403.8120.7 380 380 0 K
44113706441 FRAME SGP060
0 RAW 71 71 0 No Action
CLOSURE CLIP
44113706559 WITH WIRE Increase to vendor HI/SMc
0 SPRING SGP060 R 1287 1288 -1 stock K
44113707046 FRAME BGP060 HI/SMc
0 RAW 237 239 2 Check HL01 stock K
44113707468 CANOPY SGP060 No Action HI/SMc
1 V2 RAW 53 53 0 K
44126000130 Spigot SGP070 No Action HI/SMc
3 complete 780 780 0 K
TC-E1-CN-XX-D No Action
44130001094 Cambridgeshire HI/SMc
1 FREE ISSU 608 608 0 K
TC-E1-CN-XX-D No Action
44130001137 Cambridgeshire NON HI/SMc
1 F/ISS 37 37 0 K
CARTON No Action
44131300375 L1132xW353xH371 HI/SMc
1 C C0303 H 48 48 0 K
44131300376 Bollard fitting No Action HI/SMc
1 (flange) 76 76 0 K
44134001171 HOUSING
4 OPTIFLOOD IP66 86 86 0 No Action
44134001172 FRAME Increase to vendor HI/SMc
3 OPTIFLOOD IP66 123 124 1 stock K
44134001190 FRAME CLIP No Action HI/SMc
1 OPTIFLOOD 53 53 0 K
MOUNTING No Action
44134001241 BRACKET HI/SMc
2 OPTIFLOOD (A/R) 253 253 0 K
44134001274 SHOULDER PIECE No Action HI/SMc
2 OPTIFLOOD 179 179 0 K
44134001302 CANOPY MOD No Action HI/SMc
3 MILEWIDE RAW 23 23 0 K
44134002119 HOUSING DBP523 No Action HI/SMc
1 RAW 32 32 0 K
44134002182 No Action HI/SMc
1 Light tresspass Torch 82 82 0 K
44134002491 CDS480 Frame ZC HI/SMc
1 RAW 44 46 -2 Check HL01 stock K
44134002492 CDS480 Top Cover No Action HI/SMc
1 ZC & CC RAW 236 236 0 K
44134002493 CDS480 Housing ZC No Action HI/SMc
1 RAW 56 56 0 K
44134002494 CDS480 Closing clip No Action HI/SMc
1 ZC RAW 87 87 0 K
44134002495 CDS480 Pole-mount No Action HI/SMc
1 dia 60 RAW 109 109 0 K
44134002496 CDS480 Pole-mount HI/SMc
1 ZC 76 RAW 50 51 -1 Check HL01 stock K
44134002518 CDS Pole adaptor dia No Action HI/SMc
1 76 RAW 128 128 0 K
44134002519 CDS Pole No Action HI/SMc
1 adaptordiam 60 RAW 501 501 0 K
63
44134002520 No Action HI/SMc
1 Classic Tophat RAW 180 180 0 K
44134002521
1 Mini Tophat RAW 0 0 0 No Action
44134002551 SRS419 Canopy Gore
2 V3 0 0 0 No Action
SRS419 Frame
44134002558 DUPONTVP-570-
1 85106 D62 0 0 0 No Action
SRS419 Canopy V3 No Action
44134002559 DUPONTVP-570-
2 85106 230 230 0 RC
44134002615 HOUSING - Mini No Action HI/SMc
1 Optiflood (Unpainted) 65 65 0 K
44134002616 FRAME - Mini No Action HI/SMc
1 Optiflood (Unpainted) 67 67 0 K
SHOULDER PIECE- No Action
44134002617 Mini O/Flood HI/SMc
1 (Unpainted 47 47 0 K
Mounting Bracket No Action
44134002633 MiniOptiFlood- HI/SMc
1 Unpaint 53 53 0 K
44134003001 CDS480 Top Cover HI/SMc
1 ZC & CC RAW P3 19 20 -1 Check HL01 stock K
44134003270 Classic Tophat
1 unpainted 10 10 0 No Action
44134003271
1 Housing CC RAW 10 10 0 No Action
44134003617 EMC plate top Large No Action HI/SMc
1 Iridium2 99 99 0 K
44134003809 Bollard Flange Body No Action HI/SMc
1 (RAW) 41 41 0 K
44134003810 Bollard Outer Rib
1 (RAW) 100 100 0 No Action
44134003811 Bollard Top Cover No Action HI/SMc
1 (RAW) 57 57 0 K
44134003813 Bollard Centre No Action HI/SMc
1 Section 60 60 0 K
44134003814 Bollard Hatch Plate HI/SMc
1 (RAW) 25 25 0 No Action K
44134003815 Bollard Embed Body
1 (RAW) 28 28 0 No Action
44134003816 Bollard Embed Centre
1 Pipe 50 50 0 No Action
44134250944 HI/SMc
1 Torch cover RAW 27 27 0 No Action K
C/BDS462 Modern
44134251152 Tophat Top Disk HI/SMc
1 10714 33 36 3 Check HL01 stock K
44134251310 Gear tray LED Top HI/SMc
1 Large Iridium2 0 0 0 No Action K
44130002118
1 Cover Square 24 24 0 No Action
44134001141
1 Telensa 60 60 0 No Action
44130001122
1 Telensa 24 24 0 No Action

64
Table 4 (Monthly stock count showing stock discrepancies (December 2013)

The above table illustrations the average monthly missing parts analysis from June 2013 to December
2013. Looking at the table, one can deduce that there has been a drastic reduction on the missing parts
which shows an improvement on the aspects of stock discrepancies, supplier not delivering on time,
incorrect master data, spec change action outstanding, no raw stock for painting outsourcing, quality
related issues etc.

In June when the project started, the average missing parts for the month of June was 192 and that of the
succeeding month (July) was 172.However, looking at the months of October, November and December
when the proposals must have been fully implemented, the missing parts reduced drastically from 192 in
at the start of the project to 11 as at December 2013. It will be ideal to state that the missing parts can’t
be zero as long as the company is producing and can only be zero if the company stops production.

Inferred from chapter one (introduction), one of the project deliverables if to reduce the missing parts. It
will be very important to note that stock discrepancies, quality issues, internal rejects, supplier not
delivering on time etc. reports as missing parts thus, reducing the missing means improving on these
parameters. From the above table, it glaring that the missing parts has been brought under control via the
implementation of the stated proposals in chapter 4 which were made by critical analysis of the painting
outsourcing activities of the company. More so, the second delivery is to reduce quality issues. From the
same table above, quality issues reduced from 15 in June to 1 in December.

More so, prior to this work, the painting outsourcing status of the company as termed complicated was
people’s reliant with no documented process flow regarding external painting outsourcing. This project
was able to design detailed and feasible process with documented standard operating procedures that
backs the designed process. From literature review in chapter 2, process improvement as a fundamental
to business management is reliant on two things; The people and The process. This project was able to
design and establish a process to complement people that handle the outsourcing tasks. The designed
process as seen from the result help to reduce individualism in the painting outsourcing process of the
company and eliminated the act of being people reliant rather the painting outsourcing current obeys the
designed painting outsourcing process.

65
Furthermore, one of the objectives of this study is to make the overall external painting outsourcing
activities of the company process based i.e. having the entire process defined in black and white by
producing a process flowchart of the overall outsourcing process. The figure 6 of chapter 5 above is a
documented process flowchart of the overall external painting outsourcing and it covers all the activities
that make up the external painting outsourcing. This flowchart was agreed and adopted by all the unit
heads that going forward the external painting outsourcing of the company will follow the trend as
stipulated on the flowchart.

Having met and exceed the project deliverables, it can be deduced that this project is successful.

CHAPTER SUMMARY

Chapter 6 explained the result of the whole exercise. Having reviewed the external painting outsourcing
of the company and make necessary proposals, this chapter discussed the effect of the proposals of
chapter 5 on the outsourcing process of the company. Table 3 of chapter 6 shows missing parts analysis
regarding external painting outsourcing from the month of June to December 2013. The parameters used
in the analysis are on the far left side of the table and includes, stock discrepancies, supplier not
delivering on time, incorrect master data etc. from the summation of missing part for the month of
December compared to that of June and July, there is a huge reduction of missing parts indicating that
the proposals made are viable and that the process has improved drastically. Furthermore, from table 4
and 5 stock discrepancies for the months of August and December respectively indicate an improvement
on that aspect. From the overall result, the outsourcing process has recorded high levels of improvement
as at December 2013 and will continue to improve further overtime.

66
 Chapter 7

7.0 CONCLUSION

This project was set out to improve the external painting outsourcing process of Philips lighting
Hamilton, UK. A detailed review of the current outsourcing status in regards to external painting of the
company was made by process mapping of the current way of work in the company to determine gaps
that need closed to enhance the external painting outsourcing process. However, significant proposals
were made to match up the findings in quest to improve the processes significantly in other to meet the
project objectives and deliverables.

The project started following a 10 weeks internship with Philips Lighting factory in Hamilton United
Kingdom where the author was made to work with the procurement team from June to August 2013.
More so, there were series of follow up and visitation outside the 10 weeks internship with company as
time and human resources were the two challenges faced in this project.

Qualitative case study research strategy was used as the best fit research strategy owing the fact that the
project is a real life phenomena. While Interpretivist / anti- positivist is the chosen research philosophy.
However, structured interview, heterogeneous group brainstorming, site visitation, process mapping and
some useful process improvement tools / techniques were employed as the research instrument for data
gathering/ collection.

From the outcome of the review of the current painting outsourcing process of the company, the findings
made depicts that the way of work with respecting to painting outsourcing is full of issues and
complications. The result of the findings shows that the current situation is characterized with stock
inaccuracies, stock discrepancies, staff resistance to adopt an enhanced way of handling the process, high

67
rate of internal quality rejects, missing parts, lack of structured delivery note, low level safety stock,
waste of money via material inaccuracies etc. However, from literature, the current painting outsourcing
process of the company prior to this improvement project contradicts / disputes the reasons / benefits of
outsourcing. Going by this trend, it will be ideal for companies not to outsource rather than having an
outsourcing process that doesn’t meet the benefits of outsourcing as stated in the literature.

In the quest to improve the process to make it look like what outsourcing should really look like, the
author made significant proposals that will re-position the outsourcing process to meet the objectives of
the project and guarantee the project deliverables. Introduction of improved pick process, introduction of
min-max for fast running raw stock, introduction of consolidated delivery note, proposal of monthly
stock check etc. are some of the key proposals made by the author as detailed in chapter 5.

The result of this project showed a significant improvement of the entire painting outsourcing of the
company as observed from the table of missing parts analysis and monthly stock check. From table .....,
the overall missing parts analysis depicts a significant reduction missing parts with time. This
development also reveals a drastic reduction of stock discrepancies, enhanced stock accuracies and
proper implementation of the proposals stated above. Also, from table ...... & ...... which displayed the
initial monthly stock of one of the company’s subcontractor that handles over 60% of the external
painting outsourcing. Table 2 which reflect the first monthly stock count was full of stock discrepancies
while table 3 reflects monthly stock as at December 2013has negligible stock discrepancies. These
showed significant improvement of the painting outsourcing.

In the quest to sustain this conspicuous improvement in the external painting outsourcing (outsourcing),
the following recommendations were made:

A recommendation is made for full implementation of all the stipulated proposals made on this
project without disregarding any. Some of which are:

• Monthly stock check –every 3rd Thursday of the month

• Min max stock level
• Delivery note
• Improved pick process
• Inspection of delivered painted parts from subcontractor
• When phoning for transportation of raw stock to vendor, kindly take note of the
quantity of materials involve avoiding alteration of the delivery note.
68
 • The author will also recommend an introduction of monthly or bi-monthly meeting with external
painting contractors with the view of continues improvement and sustainability of outsourcing
process and to encourage them to improve on their process if need be.
• Introduction of monthly meeting between procurement team and warehouse team on continue
improvement of the process.
• Knowledge sharing section among procurement team for easy cover in the event of absenteeism
• Setting a tracker to monitor min max stock levels
• File should be created for filing hard copies of signed delivery note for traceability
documentation purposes

It can be deduced from the result of this research that the entire project is a huge success as the
objectives of the project and deliverables were met by significantly improving to external painting
process to reduce quality issues, missing parts and enhance service delivery to the benefit of the
company’s customers as well as enhance competitive advantage in the global market.

69
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