A production transfer risk assessment framework

Abstract

Many companies transfer production between them as part of relocation processes such as offshoring and outsourcing. Such production transfers (PT) are often associated with the risk of not achieving the expected performance results. Thus, many scholars and practitioners have acknowledged the importance of a thorough PT planning, based on risk management principles. One major principle is the assessment of PT risk in early stages of the process, in order to identify risk factors, analyze potential risk scenarios generated by the factors, implement risk-mitigation actions and improve PT performance. While several scholars have recommended conducting assessments early in the transfer process, which through the risk management lens, can be regarded as variants of risk assessment, there has not been published any recent review of the extant research on the risk assessment early in the PT process. Thereby, the main objectives of this paper are to identify and classify potential risk factors in the extant research, propose an assessment tool and test its utility on a longitudinal PT case. The paper also provides suggestions of how to apply the proposed tool to evaluate the requirements for resource intensive activities between the PT parties.