Outsourcing is a way of life for manufacturers and many would not survive the marketplace without this option but there are some risks to consider…
In the second of five weekly installments, Mark Causer, director at Emsea continues to talk us through the most common outsourcing mistakes and what your business can do to avoid them.
- Accepting A Quote Without Considering Non-Price Factors
A new outsourcing relationship usually begins with a request for a quote but rarely with a conversation. Often carried out via email, the contract manufacturers follow the quotation process and provide a price to be sent back to the OEM.
But throughout my extensive time in the industry I have come to recognise a significant danger with this method: no attention to non-price details. Various ‘non-price’ factors can drive your cost up (or down) depending on how well you structure your agreement with your contract manufacturer.
Manufacturing downtime is a nightmare for manufacturers and it may lead to significant delivery delays, but by having a good ‘Quality Agreement’ and the correct procedures in place you can minimise downtime. Working with a contract manufacturer that fully understands these issues can, in the long term, save you significant losses.
Subcontracting/ Outsourcing Further:
Is your contract manufacturer working solely in-house, or are they using additional companies? It is worth checking this out as you could find your end-product has travelled between numerous external companies, exposing you to additional complications such as quality issues, delays, increased environmental impact-to name but a few.
You should consider the following: does the contract manufacturer have their own transportation or do they use an external courier? What are their transport policies to prevent damage when handling your goods? Are the drivers trained in any specific handling techniques relevant to your product? Is their sufficient capacity for your delivery to be made on time?
Make sure you confirm your expected delivery date and ensure that all aspects of the job are planned-in appropriately. We often get new business as a result of the customer’s dissatisfaction with the delivery times of their existing contract manufacturer and yet this is an area that is often overlooked at quote stage.
And possibly the most important…
Establish Your Expectations From The Start:
Be clear in what you expect from your contract manufacturer and communicate this effectively to them as this will avoid many potential issues further on down the production process.