| Within the current recessionary business climate and | | | | the Replenishment Lead Time and supply the client |
| within the Strategic Planning process, there may be a | | | | with a delivery lead time that is attainable and |
| strong Business Case to outsource one of the | | | | acceptable to the client. |
| Functional Areas of a company. Outsourcing is often | | | | - A rolling 6 month forecast is a requirement to provide |
| made in the interest of making better use of capital, | | | | supply chain a view into the mix and number of SKUs |
| infrastructure, technology and current capacity rather | | | | that will be required as a forward look into the |
| than an expanded investment in brick and mortar. | | | | business. |
| Outsourcing can also be a downsizing strategy. | | | | - Without a forecast, lead-times and inventory |
| The services that are commonly outsourced can be | | | | becomes an Achilles heel to the manufacturing |
| Information Technology, Human Resources, Facilities | | | | process. |
| Management/Real Estate, Accounting, Design | | | | |
| Engineering, Manufacturing, Test, Forward and | | | | Manufacturing |
| Reverse Logistics, to name but a few. | | | | - Now the ‘build something’ begins with the |
| The purpose of this article on Outsourcing is to deal of | | | | preparation of the manufacturing process and profiles |
| the role of Product Management and the transfer of | | | | need to be developed. |
| the management of a product, product group or an | | | | - This will/can include any equipment programs and |
| entire product portfolio to a selected service provider. | | | | profiles for the SMT equipment, any special tools and |
| An outsourcing arrangement is in the form of a two | | | | or fixtures that will be required for assembly. |
| party Manufacturing Service Agreement (MSA) that | | | | - Manufacturing assembly instructions need to be |
| describes the services to be provided and the metrics | | | | created and details into people and tools and jigs that |
| that will be used to measure the performance of the | | | | may be required. |
| service provider for the term of the contract, usually | | | | - This aspect needs to be done in advance of the first |
| one year and auto renewable. | | | | build so as the process can start immediately. |
| To illustrate, the following steps will use will deal with | | | | |
| outsourcing of electronic component manufacturing, | | | | Test |
| specifically the transfer of a product to a low cost | | | | - All product that is manufactured needs to have an |
| geography or to an alternate or the addition of a | | | | end to end strategy as to how it will be tested to |
| second supplier. | | | | insure quality product is manufactured in a repeatable |
| The fundamental building blocks of a successful | | | | process. |
| outsource transfer is the process and the integrity of | | | | - Test processes, equipment, and test equipment |
| the information given from one company to another. | | | | manuals must be in place and the latest rev of the |
| The seven key attributes or ‘critical success | | | | tests being performed must be signed off by the |
| factors’ of this type of well orchestrated Product | | | | service provider and the client. |
| Management outsourcing arrangement can be broken | | | | - This aspect of the process is one that requires some |
| down as follows: | | | | extra care and review to insure that the procedures |
| | | | | and equipment are ready when the manufacturing |
| Documentation | | | | process transfer takes place. |
| - Documentation will be the foundation of the process | | | | |
| and attention to details is paramount at this stage. | | | | Logistics |
| - The information needs to be complete and accurate. | | | | - Now product is ready for shipment and the start of |
| - Drawings need to be of the latest revision and must | | | | revenue generation. |
| include any ECO or planned ECO. | | | | - To do so the information on frequency of shipments, |
| - The bills of materials must have complete part | | | | daily, weekly, monthly for example must be in place. |
| numbers, supplier’s names and it is always helpful if | | | | - Any international shipment requirements that include |
| there are multiple sources. | | | | duties or tariffs or any licenses need to be completed |
| - The master data must be created by the service | | | | and in place. |
| provider and therefore both the drawings and the bills | | | | |
| of materials must be reviewed and the revision level | | | | Infrastructure |
| agreed to by both the service provider and the | | | | - Infrastructure is of course the all encompassing |
| outsourcing company to insure the product is | | | | front-to-back aspect of the process. |
| manufactured to the latest revision. | | | | - Before any decisions get made does the service |
| | | | | provide have the infrastructure required to |
| Supply Chain | | | | manufacture the product. |
| - Inventory, a necessity to a successful manufacturing | | | | - Are there clean room or special handling |
| plan but, lack of inventory can be disastrous. | | | | requirements for optical or leading edge technology |
| - The client will need to provide sourcing information | | | | products? What kind of power requirements is |
| as to the percentage of the products will be coming | | | | needed? |
| form North American suppliers and also the | | | | - The IT and network structure must be available |
| percentage of suppliers from Asia and other parts of | | | | when and where it is r |
| the globe. | | | | - Does the product have any security that needs to |
| - Contracts that exist need to be shared and letters of | | | | be created and put in place? |
| authorizations need to be provided to the service | | | | - required. |
| provider so as the suppliers will honour any existing pre | | | | |
| negotiated contract pricing. | | | | In conclusion, outsourcing to a service provider is a |
| - Existing inventory needs to be reconciled and | | | | common practice and has been a longstanding key |
| prepared for shipment to the service provider so as to | | | | attribute of fortune 500 companies as well as start |
| minimize any duplicate purchases. | | | | ups and everyone in between for decades. It is |
| | | | | something that with an interactive, robust outsourcing |
| Planning | | | | process with a good client project teams both the |
| - Demand signals and the frequency of there receipt | | | | client and the service provider will have a long lasting |
| must be adhered to so the planning group can define | | | | relationship with benefits to both companies. |