Partners with global perspective
In many respects, the historical outsourcing model is broken, says Bruce Rayner, director of research and consulting for Technology Forecasters Inc. (TFI). With notable exceptions, most of the industry is “failing in the most basic economic measures of business success.” Despite that, the push to outsource continues, and manufacturers must find ways to make these projects successful.
In many respects, the historical outsourcing model is broken, says Bruce Rayner, director of research and consulting for Technology Forecasters Inc. (TFI). With notable exceptions, most of the industry is “failing in the most basic economic measures of business success.”
Despite that, the push to outsource continues, and manufacturers must find ways to make these projects successful. Companies often continue to execute flawed strategies, unaware of the complete picture. Evaluating—or reevaluating after a year or two—all dimensions of an outsourcing program is one way to get the big picture. Using partners and consultants with global outsourcing experience is another.
Look at the numbers
“China's economy is doing great guns, and over the last few years it's not unusual for a customer that's North America centric to say, 'We want to move this product to China,'” says David Brakenwagen, industrial segment vice president for Solectron. “There's no doubt the labor costs are low, but if you're making a larger product (25-50 lb), your shipping or logistics costs can eat up anything you save. It may make more sense to have your low-cost center down in Mexico.”
Solectron provides outsourced services such as design, engineering, manufacturing, supply chain and after-market service worldwide; most clients have some manufacturing away from where they're dominant, says Brakenwagen. “Each region has certain skills and expertise, and having someone that's operating globally and looking to optimize based on a worldwide perspective is an asset. You're benefiting from that level of experience,” he says. Solectron automation-market customers include Honeywell, Trimble, Teradyne, and Analog Devices.
TFI consultants help clients through an outsourcing audit program. They evaluate key performance metrics and their implications across the extended enterprise. TFI clients include those new to the outsourcing strategy or those “trying to break free of unworkable legacy relationships,” says Rayner.
TFI says areas to evaluation include:
Manufacturing and outsourcing best practices;
Existing processes and honing of competitive practices;
Risk mitigation processes and management;
Supply chain and supplier relationships;
Total cost of program;
Optimizing outsourcing decisions while accelerating product introduction; and
Meeting new environmental requirements.
System integrators with experience in other countries and different industries can often be valuable outsourcing partners. In Control Engineering's System Integrator Guide, 84 companies list “international” experience and capabilities.
“The process of creativity and innovation is the process of moving ideas from where they are known to where they are not,” says John Hanks, director of marketing and measurement control, National Instruments. “Dispersed automation system integrators spread new innovations from one industry and geography to the next.”
National Instruments has Alliance Program partners in every region and industry to assist customers with everything from small integration projects to large multifaceted systems requiring in-depth expertise. Hanks has thought a lot about how past solutions are shared among developers. “Best of breed automation integrators develop a process for gaining access to new automation opportunities, storing their experience and bridging their innovations,” he says.
System integrators gain access by building a network of relationships and providing solutions to clients across industries and business functional areas, says Hanks. Often, innovations are developed through a network of relationships around an emerging technology, such as wireless communications.
Says TFI president Pamela J. Gordon, “The global extended enterprise has reached a level of complexity where there is a critical need for a comprehensive, multi-enterprise program to bring all key players and challenges together and create fresh sustainable solutions. Our clients have been telling us they need an objective third-party with deep industry experience to help them address these challenges.”
Renee Robbins is Editorial Director of Control Engineering. She can be reached at email@example.com