D
Dean Frederickson
Govind, I had to rely on my one good brain cell to remember what I did from 1985 to 1988,
I think I remembered most of it. Hope it helps.
I think I remembered most of it. Hope it helps.
Quality in Outsourcing - Survey - October 2008
- Thread starter Govind
- Start date
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Gordon Clarke
It can’t be all that limited if your organization uses outsourcing
I have a few questions (both to Adarsh and anyone else who does it).
1. What and when started the ball rolling to go for outsourcing?
2. How was the decision received in the various departments?
3. How many (if any) lost their jobs?
4. How much “homework” was done on finding suitable outsourcing companies and which countries were perceived as being relevant?
5. Did things go smoothly from the beginning and, if not, what was the transition time?
6. Looking back, was the decision as sound as originally thought? – or if not, what would be done differently today?
Don’t worry if you can’t answer all the questions. Hopefully others will try too.
If we have someone out there that is really good at this kind of thing, then maybe we could make a check list for companies to use that would give people the things to be on the lookout for when outsourcing. I hope this would supplement what govind is doing and not the oposite. I’m already feeling I want to give it a go.
I definately know most of the things I'd want to know before taking the "leap". If done correctly (outsourcing that is, not making a questionaire) it will require a substantial investment - the more that can be saved the higher the probable investment - I'd guess I case the theoretical whiz gurus decide to have a go and make it into a Catch 54, I’d recommend using KISS (Keep It Simple, Stupid) :mg:
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Gordon Clarke
My ”contribution” to giving outsourcing a fighting chance and hopefully, satisfactory results for both parties.
This is just to start things off.
1. Questions to be asked before outsourcing:
a. If we pass on know-how can this backfire? i.e. create competition from copies or imitations.
b. What will be the consequences to our organization and will we loose experienced employees?
c. Will the profit margins compensate for a possible change to company image and good-will? i.e. disgruntled and/or unsatisfied employees.
2. Actions to ensure reliable outsourcing results:
a. How far (distance) is it feasible to look for companies that can supply what we are looking for?
b. Will distance affect delivery time and dealing with a possible defective delivery?
c. Will dealing with a foreign country (language, customs etc.) give any unforeseen problems?
d. What do we know about the company we would use for outsourcing? Do we know anyone they already supply to?
e. What item and in which quantity should a trial order be placed for?
3. Actions during initial outsourcing:
a. How many and who should visit the company in question?
b. What are the minimum requirements and capacity?
c. What will be the estimated cost to ensure as much certainty for getting things right from the first delivery?
4. Follow-up actions to monitor outsourcing reliability and satisfaction:
a. How much final inspection and documentation do we wish the company to carry out?
b. How often shall we check deliveries to ensure they are correct?
c. If measuring tools and gages are involved who buys and/or supplies them?
Now who wants to add to, amend or comment? Bear in mind that this took me less than 30 minutes and I only consider it a suggestion – not a work of art.
This is just to start things off.
1. Questions to be asked before outsourcing:
a. If we pass on know-how can this backfire? i.e. create competition from copies or imitations.
b. What will be the consequences to our organization and will we loose experienced employees?
c. Will the profit margins compensate for a possible change to company image and good-will? i.e. disgruntled and/or unsatisfied employees.
2. Actions to ensure reliable outsourcing results:
a. How far (distance) is it feasible to look for companies that can supply what we are looking for?
b. Will distance affect delivery time and dealing with a possible defective delivery?
c. Will dealing with a foreign country (language, customs etc.) give any unforeseen problems?
d. What do we know about the company we would use for outsourcing? Do we know anyone they already supply to?
e. What item and in which quantity should a trial order be placed for?
3. Actions during initial outsourcing:
a. How many and who should visit the company in question?
b. What are the minimum requirements and capacity?
c. What will be the estimated cost to ensure as much certainty for getting things right from the first delivery?
4. Follow-up actions to monitor outsourcing reliability and satisfaction:
a. How much final inspection and documentation do we wish the company to carry out?
b. How often shall we check deliveries to ensure they are correct?
c. If measuring tools and gages are involved who buys and/or supplies them?
Now who wants to add to, amend or comment? Bear in mind that this took me less than 30 minutes and I only consider it a suggestion – not a work of art.
A
alekra
I have filled the form with a former experience also. I hope it can help.
Congratulations!
Regards!
Congratulations!Regards!
A
Ady11
Good survey - thought provoking. Prehaps I should share this with management here.
8 years of outsourcing experience in lower volume high-tec environment, I have opinions and can base many from experience both good and bad however has to limit my response due company rules & reg.
I look forward to the output.
8 years of outsourcing experience in lower volume high-tec environment, I have opinions and can base many from experience both good and bad however has to limit my response due company rules & reg.
I look forward to the output.
Gordon,
This is already good baseline checklist for a 30 minutes effort. Imagine if you were to put more time and effort, you could potentially come up with a more comprehensive list! One of the items that will be added in the CD accompanying this book will be a comprehensive Outsourcing checklist (also covering offshoring, manufacturing, software, service, etc). If this list expands reasonably well by mid next year, I will be pleased to use the contents with acknowledgements.
The portion that I did not cover in my QP article is the activities that happen surrounding the outsourcing decision. I have word limitations from magazines so I limited my scope. In my book, I will however cover the decision process for outsourcing. All your points are very important and interesting. I will try to add more of my thoughts on other points over a period. I am tempted to respond to couple of your points though.
If we pass on know-how can this backfire? i.e. create competition from copies or imitations.
Usually outsourcing is targeted for non core activities of the organization. The technology and processes that are proprietary are performed by the organization or its subsidiary. Intellectual Property protection is gradually maturing outside USA and Europe. There are product segments where the players are so few, any leakage of IP will be obvious. I agree there is always some risk of IP infringement from key employees leaving outsourcing organization and competitors having contract with the same outsourcing partner. This is not just offshore destinations, also in the USA. To a major extent this is outside organization’s control. While ensuring adequate due diligence in IP, Organization should also focus on areas that are in their control. i.e. continue to innovate at a pace competitors cannot keep up with, set other differentiators like Quality, Cost, delivery, service, availability, financial stability, business maturity, etc.
What will be the consequences to our organization and will we loose experienced employees?Short answer: Knowledge Management and Sustainability.
This is again a good question that I have addressed in the article. Outsourcing should not leave bad taste on employees always resulting in headcount. This will make the employees very insecure during outsourcing process. This will indirectly result in withholding key product, process information in order to create long term dependability. Organizations should recognize the experienced, knowledgeable employees and retain for new product Development, and outsourcing sustainability. Employee should be able to transfer their “tacit” knowledge without fear.
Will the profit margins compensate for a possible change to company image and good-will? i.e. disgruntled and/or unsatisfied employees.
Outsourcing organization can be more responsible “corporate citizen” by helping the employees learn new skills and tools before letting them go into unemployment.
Regards,
Govind.
Last edited:
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Gordon Clarke
Govind,
Thanks for what I regard as a compliment. Asking the “right” questions is something some people think I’m sometimes good at, whereas others find I'm a pain in the butt!
I could probably improve it as you suggest by taking more time, but the reason I didn’t do that is that there will be many more in the cove with more experience than I have. 90% of what I wrote was only using common sense and trying to see it from both sides of the fence. I know from talking to people from Danish companies that have experienced their company outsourcing, is insecurity re their job and a general resentment with the company or country that they feel is “stealing” their jobs. I’d compare this to a statement I often make, “a Quality Manager has done a perfect job if he or she can make themselves redundant”. Now this is probably a statement most can agree with, but do you know any QM that tries to get themselves fired in real life? It’ the same with outsourcing – what’s good for the company isn’t necessarilly felt as good for all employees, especially the ones at risk.
This brings me to commenting on a couple of your comments, which on face value are correct, but nevertheless based on the assumption that companies care about their employees. Oh man, I wish I lived in that perfect world. What I write now is based on personal knowledge and experience.
“Usually outsourcing is targeted for non core activities of the organization”.
In the late 70ties, as part of the sale of the F-16 fighter plane to NATO European countries (Denmark, Norway and Holland) the deal was that those European companies make and supply F-16 parts. Denmark is by no means a backward country, but in the company I was employed as Quality Engineer the technology necessary was completely new (virtually unknown in Europe I believe), so machines had to be bought in the USA and personelle from both countries travelled back and forth, myself included to train and be trained. This sentence is “off topic” but during my business visits to the USA I saw things that impressed me very much but other things that shocked me – it could make for an interesting topic. Anyway, to get back to this thread, the end result was that the quality of the products for the F-16 produced in Denmark after 3 years were actually better (and less expensive) than the American ones so all orders for those specific part were eventually placed in Denmark even after the original agreement was fulfilled. I don’t think that this possibility ever crossed the mind of the American workers that helped train their Danish counterparts. I know that almost all the Danish companies that were involved in the F-16 deal now are now well renowned within aerospace manufacturing and compete regularly with American companies.
Another example is that when I was in China with my own product, I discovered that the Chinese I was dealing with only had to be shown things once and they immediately knew exactly what to do and how to do it. I wish I could say the same about many of the people from European companies that have seen and tried my products. I compare this “mentality” to those that use a vernier caliper regularly – they forget that they couldn’t use one right away when they tried one for the first time! When I demonstrate my products to Europeans they don’t seem to listen to what I say or watch what I do as opposed to the Chinese who listened intently and watched every move. The Japanese also have this respect for the "teacher". The biggest “sinners” in Europe (with my products) are those that consider themselves “metrology experts”. Everything is simple – when you know how!
“Outsourcing organization can be more responsible “corporate citizen” by helping the employees learn new skills and tools before letting them go into unemployment”.
Of course I agree, but my gut feeling is that the vast majority of companies jut don’t do this. I’ve always found that the larger the company or organization, the more insensitive it is to individual employees. It’s easier to make “tough” decisions or follow orders when you don’t personally know the people involved. Ask anyone who has dropped bombs during a war.
If you can use anything that I’ve written then be my guest and if there is anything you feel I can help with just ask, and if I can I will. A “free” copy (or a large discount) of your book when it’s published would be “payment” enough. I’m being half serious and half kidding.
Regards,
Gordon
Thanks for what I regard as a compliment. Asking the “right” questions is something some people think I’m sometimes good at, whereas others find I'm a pain in the butt!
I could probably improve it as you suggest by taking more time, but the reason I didn’t do that is that there will be many more in the cove with more experience than I have. 90% of what I wrote was only using common sense and trying to see it from both sides of the fence. I know from talking to people from Danish companies that have experienced their company outsourcing, is insecurity re their job and a general resentment with the company or country that they feel is “stealing” their jobs. I’d compare this to a statement I often make, “a Quality Manager has done a perfect job if he or she can make themselves redundant”. Now this is probably a statement most can agree with, but do you know any QM that tries to get themselves fired in real life? It’ the same with outsourcing – what’s good for the company isn’t necessarilly felt as good for all employees, especially the ones at risk.
This brings me to commenting on a couple of your comments, which on face value are correct, but nevertheless based on the assumption that companies care about their employees. Oh man, I wish I lived in that perfect world. What I write now is based on personal knowledge and experience.
“Usually outsourcing is targeted for non core activities of the organization”.
In the late 70ties, as part of the sale of the F-16 fighter plane to NATO European countries (Denmark, Norway and Holland) the deal was that those European companies make and supply F-16 parts. Denmark is by no means a backward country, but in the company I was employed as Quality Engineer the technology necessary was completely new (virtually unknown in Europe I believe), so machines had to be bought in the USA and personelle from both countries travelled back and forth, myself included to train and be trained. This sentence is “off topic” but during my business visits to the USA I saw things that impressed me very much but other things that shocked me – it could make for an interesting topic. Anyway, to get back to this thread, the end result was that the quality of the products for the F-16 produced in Denmark after 3 years were actually better (and less expensive) than the American ones so all orders for those specific part were eventually placed in Denmark even after the original agreement was fulfilled. I don’t think that this possibility ever crossed the mind of the American workers that helped train their Danish counterparts. I know that almost all the Danish companies that were involved in the F-16 deal now are now well renowned within aerospace manufacturing and compete regularly with American companies.
Another example is that when I was in China with my own product, I discovered that the Chinese I was dealing with only had to be shown things once and they immediately knew exactly what to do and how to do it. I wish I could say the same about many of the people from European companies that have seen and tried my products. I compare this “mentality” to those that use a vernier caliper regularly – they forget that they couldn’t use one right away when they tried one for the first time! When I demonstrate my products to Europeans they don’t seem to listen to what I say or watch what I do as opposed to the Chinese who listened intently and watched every move. The Japanese also have this respect for the "teacher". The biggest “sinners” in Europe (with my products) are those that consider themselves “metrology experts”. Everything is simple – when you know how!
“Outsourcing organization can be more responsible “corporate citizen” by helping the employees learn new skills and tools before letting them go into unemployment”.
Of course I agree, but my gut feeling is that the vast majority of companies jut don’t do this. I’ve always found that the larger the company or organization, the more insensitive it is to individual employees. It’s easier to make “tough” decisions or follow orders when you don’t personally know the people involved. Ask anyone who has dropped bombs during a war.
If you can use anything that I’ve written then be my guest and if there is anything you feel I can help with just ask, and if I can I will. A “free” copy (or a large discount) of your book when it’s published would be “payment” enough. I’m being half serious and half kidding.
Regards,
Gordon
I was reviewing the ISO 9001:2008 amendment. The added sentence to outsourced process, new notes is interesting and useful additions to the standard.
I am particularly happy to see the notes “Ensuring control over outsourced processes does not absolve the organization of the responsibility of conformity to all customer, statutory and regulatory requirements”. Even though this is in the notes and not requirement, I hope this will send message to the organizations to take responsibility for product failures and recalls and not just blame their outsourcing partners.
I am hoping this Outsourcing notes will make it requirement in some form by 2012.
Regards,
Govind.
I am particularly happy to see the notes “Ensuring control over outsourced processes does not absolve the organization of the responsibility of conformity to all customer, statutory and regulatory requirements”. Even though this is in the notes and not requirement, I hope this will send message to the organizations to take responsibility for product failures and recalls and not just blame their outsourcing partners.
I am hoping this Outsourcing notes will make it requirement in some form by 2012.
Regards,
Govind.
Raffy
Quite Involved in Discussions
Almost same requirement with ts16949 Clause 4.1 General Requirements:... These processes shall be managed by the organization in accordance with the requirements of this international standard. Where an organization chooses to outsource any process that affects product conformity with requirements, the organization shall ensure control over such processes. Control of such outsource processes shall be identified within the quality management system. NOTE Processes needed for the quality management system referred to above should include processes for management activities, provision of resources, product realization and measurement." and Clause 4.1.1 General Requirements - Supplemental: "Ensuring control over outsourced processes shall not absolve the organization of the responsibility of conformity to all customer requirements. NOTE See also 7.4.1 and 7.4.1.3."
Raffy
Raffy
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Gordon Clarke
I'll admit immediately that I haven't read this ammendment so if I "put my foot in it" then that's my "excuse"
My personal opinion is that most companies outsource because they find a company that can make what they want cheaper than they can themselves. This usually means that the company departments and/or machines that previously made these parts become redundant.
These "new" companies replace the "old" department(s) and thus, should be considered "sub-suppliers".
Right or wrong, I've always regarded the difference between a supplier and a sub-supplier as one (the supplier) makes standard parts and the other (sub-supplier) makes parts to company specifications.
In the case of a sub-supplier, then the company ordering should regard the sub-supplier as part of "themselves" and thus, as a minimum, share responsibility for the produced parts. If the sub-supplier was still their own "old" department they'd be 100% responsible.
I suppose all departments in a company can be regarded as sub-suppliers to the company as a whole.
Add (deduct?) the "responsibility factor" to the calculated savings when outsourcing
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