Outsourcing has become a vital strategic element in all kinds of organisations ranging from
manufacturing to the service industry. Due to increasing trends a large number of organisations have
adopted or are in a process of adopting outsourcing. Currently organisations practising outsourcing have
a financial advantage over others. However, in due course, many others will join the race and may cause
the organisations practicing outsourcing to lose their competitive advantage. The organisations,
however, prepared to practice outsourcing effectively by continuous improvement will achieve
enhanced performance. An effective way to incorporate a continuous improvement strategy into the
outsourcing process is to integrate it with the lean system philosophy. This, however, is a complicated
task. Over one hundred management tools have been listed that must be mastered to achieve the desired
results (Bicheno, 2004). Despite this, different organisations are adopting various outsourcing models to
acquire competitiveness (Brannemo, 2006). The selection of a suitable lean tool requires in depth
understanding of the outsourcing process and strategies, by applying the lean philosophy to outsourcing,
the final product cost can be reduced and the gap in the provider-consumer chain can be minimised by
developing a continuous flow. In order to successfully implementing the Lean Outsourcing model,
workforce training is essential. A survey (Fan, 2000) shows that organisations are outsourcing rather
than focusing on price and other issues of the business. Instead of continuously improving the
outsourcing programme by conventional means, it is advisable to develop and implement an integrated
Lean Outsourcing model, so that continuous improvement becomes a part of the strategy.
Realizing the importance of improving the outsourcing process, an attempt has been made in this paper
to develop a model for integrating it with the Lean system. The objective of this paper is to present how
the continuous improvement strategy can be incorporated into the outsourcing process by integrating it
with the lean system. Furthermore, the aim is to analyse, how effectively this can be done to achieve an
improved outsourcing model. The Lean Outsourcing model can be used as a base for building a
continuously improving competitive sourcing decision model
