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Developing a unified manufacturing and sourcing strategy in a multi-business unit engineering firm

Competitive pressures in manufacturing industries have led to an increased utilization of outsourcing as a strategic alternative to vertical integration. This thesis develops a methodology to aid multi-business unit firms in formulating outsourcing strategies on the corporate or business group level. It offers frameworks for identifying non-core manufacturing capabilities and make versus buy decision making. In addition, it identifies critical organizational and communication linkages between levels of management and functional groups that are necessary precursors to developing a successful outsourcing strategy. Finally, it presents an analysis of the growing importance of the strategic sourcing function within the engineering firm, the informational inputs needed for the sourcing organization to adequately support activities across all business units, and investigates issues of measurement and performance within a cross-business unit support function. The research leading to the development of the described outsourcing methodology was conducted jointly between the MIT Leaders for Manufacturing Program and Honeywell International within the Honeywell Automation and Control Solutions Business Group. Thesis Supervisor: Donald B. Rosenfield Senior Lecturer, Sloan School of Management Thesis Supervisor: Jonathan Byrnes Senior Lecturer, Center for Transportation and Logistics Thesis Reader: Sanjay Sarma Associate Professor, Department of Mechanical Engineering