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MMS takes the mystery out of outsourcing. An outsourcing
strategy can propel a business or more often than not, kill a business if not carefully planned and implemented. Our advisors
drive you to take a step back and calmly review all your options before leaping into any one supply-chain solution.
The key word is “strategic.” Many
of today’s manufacturing and service organizations impulsively outsource to increase profits but find poor planning
and hasty choices even more damaging to their long-term goals such as corporate growth. Recovery from quality problems, poor
customer service, and insufficient project management will often far outweigh the immediate benefits of a reduction in cost
of goods. MMS recognizes these pitfalls and guides our clients around common traps.
Why outsource?
Many businesses are discovering that outsourcing or subcontracting non-critical, repetitive services can minimize
operating costs, leaving only critical, core business activities in-house for effective control and security. This is of course
not a new, breakthrough concept. The concept of subcontracting has been around a long time but is gaining more popularity
among larger US companies looking to better compete with overseas product manufacturers or attempting to gain market share
by expanding operations into growing global markets.
What should you outsource?
Many businesses are subcontracting manufacturing, hardware & software engineering, and after-sales technical support.
Several administrative areas are often sent out-of-house, as well, such as payroll and employee benefit coordination. Outsourcing
of quality assurance and product management remains internal in most cases, for reasons of confidentiality and control. Project
management services provided by outside teams are a viable option when coordinating amongst several different global suppliers
and regional offices. This objective element can be a valuable tool for senior managers establishing large-scale policy and
developing business processes.
What shouldn’t you outsource and why?
Outsourcing risk assessment is a critical first step before formalizing any significant supply chain relationship.
It is important to carefully establish your business goals before entering into any outsourcing contract. Once you set your
goals, careful consideration of what is and is not outsourced and why, is the next step before making big changes. For instance,
if your primary business goal is to improve product quality, outsourcing product manufacturing may be a mistake. Subcontracting
after-sales service at a lower rate may prove to be a better target particularly if your service personnel can be re-trained
in quality engineering or product engineering. Its about balance and applying your resources where it makes the most sense.
Managing The Changes
Success is not accidental. It usually involves setting goals, planning, action, and observation. Successful
outsourcing is no exception. Changes in process and procedure will be required. Specialized, dedicated, and effective management
will be required. This will most likely involve both internal and external project management resources. Project managers
and assistant PM’s are responsible for meeting clearly defined goals, within budget, on time, in a quality manner. Experienced,
outside project managers are often assigned the responsibly of managing these changes, which have been targeted by senior
management within the organization, in order to keep existing internal product, program, and engineering management focused
on personnel and tasks. These project managers become “absolute owners” of the goals set from above and it is
their ultimate responsibility to insure the overall success of each assignment.
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