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Through an appropriate process design and outsourcing decision, enterprises are able to control critical factors and performance indices to maintain flexibility and robustness. This study uses an empirical research to investigate the performance of Taiwanese production management systems. We analyze and compare the differences between the production management system with low, middle and high outsourcing rate strategies through questionnaires. There are four critical factors which influence customer satisfaction, of which flexible capability is the most influential. Satisfied suppliers will promote a good performance within SCM, and it will improve customer services. Enterprises should cooperate with their suppliers closely in their business collaborations. The middle outsourcing rate strategy has better flexibility in product and process change. These findings give enterprises managerial insights to achieve good performance and production management objectives.

This article gives a general decision framework for companies outsourcing strategic decisions. The authors argue that a consistent outsourcing strategy, strategic evaluation and searching of external sources, and effective implementation processes are three essential steps toward successful innovation outsourcing. The article points out that outsourcing strategy is embedded in a company's overall technology strategy, and analyzes the decision context of the sourcing strategy. The new theoretical idea is the portfolio view of outsourcing strategy. The soul of innovation outsourcing should be a mix of different external sources and different levels of integration and a match with the proper organizational structure. Examples of generic portfolios are given at the end of the article.