Fundamentals of Outsourcing

A reader recently commented on one of my previous posts about outsourcing to say, change in a business environment “can be compared to a large ocean liner changing its course.” So the question is, having this knowledge, how do you implement change at your organization?Interesting you should use a ship analogy, as this is my favorite way to explain changing course. The best analogy I have come up with is the Exxon Valdez. The Valdez saw the coastline of Alaska 30 minutes prior to actually hitting it, the problem was it takes 45 minutes to change course for a ship that large.

Change is hard, and I know that seems obvious, but there are many people afraid of change and will drag their feet through out the process. Below are a couple of key elements you need to drive change as it relates to outsourcing.

1. Support from your executive management
2. A champion with the clout to get things and people going
3. An understanding of the end goal that the change seeks to effect

If you have these three things you are ahead of the game and can execute the following steps to move towards outsourcing.

1. Pick a product that is simple to manufacture because you need a win to start. (Notice I said “a” product–don’t get to ambitious to start, get your feet wet, then jump in.)
2. That one product should not be politically charged otherwise you lose support from the start.
3. Make sure your BOMs are clean
4. Make sure you have clean drawings
5. Make sure you understand
a. What facilities are required
b. What tools are needed to build the product
c. Your test is defined

Once you have the above things (note the first two steps can and should be done in parallel) the next steps are to:
1. Find target suppliers
2. Tour the suppliers’ facility to ensure fit and that they meet your quality constraints.
3. Put quote packages together and send to those suppliers you liked.

Once your quotes are complete and you award, now is when the real fun starts. You will have to provide support and be prepared for failure on the first couple of units. Remember the supplier is new to it and that they do have a learning curve.

I hope all of the above is helpful, please let me know by commenting below.