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PPT (Precision Parts Technologies Co.)
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Outsourcing Supply-chain to Asia
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Outsourcing: Staying Afloat in the Transition Process
What it takes to avoid the rocks when moving some or all of an
in-house manufacturing process to a contract manufacturer.
A primary contemplating manufacturing outsourcing must
consider which operations it will
outsource and which it will retain, how the relationship with the
CM will be managed, the
incentives to put in place to obtain the desired behaviors from
the CM, and how the
outsourcing will affect future product changes and
improvements.
Major areas of concern: product-quality & legal liability issues;
how does the CM manage
suppliers, inspections, and labeling?
CHECKLIST for preparation and partner selection:
1. Define purpose for outsourcing?cost, strategic focus,
access to new markets.
2. Define the scope of what will be outsourced (e.g., which
products, quality and supply chain
functions, manufacturing operations, etc.).
3. Enlist senior management support.
4. Build a cross-functional core team that will manage the
selection and transfer process.
5. Identify potential contract manufacturing partners.
6. Narrow potential partner field down to a few semifinalists.
7. Develop a detailed request for proposals (RFP) and submit
to semifinalists.
8. Conduct contract manufacturer reviews, including detailed
site visits and reference checks.
9. Evaluate RFP responses and findings from contract
manufacturer reviews (keep in mind the
purpose for outsourcing defined above).
10. Select contract manufacturing partner.
CONCLUSION
Moving a production line to a CM without negative impacts on
product supply or quality
requires diligent planning and careful management. Every
party involved in the transition,
whether on the primary manufacturer or contract
manufacturer side, must understand that
no one is succeeding if anyone else is failing. With the right
frame of mind, the right
management processes, the right staffing, and the right
planning, the rocks that are bound
to emerge during transition can be spotted and avoided, with
time to spare.
(Extract of an article by Larry Strauss, who is a principal in
the Waltham, MA?based headquarters of
management-consultancy PRTM. Copyright ?001
Medical Device & Diagnostic Industry)
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