As I See It…
The single largest challenge for most manufacturing leaders is a proactive cost containment program. Manufacturing operating expenses continue to ratchet up based on many factors out of their individual control. Federal and state legislation add layers of complexity and risk. Associate health care costs continue to escalate. The cost of training new associates and the lack of predictable productivity from new associates slow the commitment to make the investment in new full-time associates. So the question remains, how do manufacturers with accelerating demands meet their market demand while minimizing risk and providing an excellent customer experience?
This dilemma of meeting the requirement to increase production without increasing fixed human resources has led to two divergent types of solutions. The first is automation, which may require significant capital expenditures, and is best suited for very standard repetitive assembly or processing applications. The second option is to offer short-term or permanent outsourced subassembly or final assembly services. Our services provide customers with both options. One area where we are currently experiencing customer demand growth, is providing flexible outsourced assembly services to small and mid-sized manufacturing companies. We see our customers looking for a new strategic angle to improve their productivity and ultimately their bottom line.
So what are the key areas of expertise in the selection of an outsourced manufacturing and assembly partner? I believe there are four vital areas to inspect in the selection process.
The four critical areas of expertise are:
- Customer intimacy
- Repeatable quality results
- Engineering expertise
- Reliable supply chain and logistics
The selection of a viable long-term reliable contact manufacturing partner can be a difficult decision.
The first component of any successful implementation will require a clear understand of all the challenges the customer is currently experiencing, and just as importantly, the potential challenges and opportunities in the future. A “one size fits all” will not work for this type of creative partnership. It requires a vendor who can provide a true customer-focused solution. A commitment to truly understand the customer’s business model and even their end customer’s requirements is essential if the long-term goal is to outsource a large segment of their manufacturing process. In an effective partnership, the vendor acts as an extension of the manufacturer’s business model and is involved in all of the business from planning through production and warranty issues.
The second key area of expertise relates to the quality control process. A customer’s brand is extremely important so a manufacturing partner must be capable of producing a quality and dependable product supply. In many cases, a custom quality standard would need to be established for the specific customer. The ISO certification standard 9001 is the minimum quality standard for global manufacturers. It would certainly be in the manufacturer’s best interest to have an ISO certified supply chain partner. In addition, it would be extremely helpful to have a group of customer referrals that address a potential partner’s past performance and their ability to meet the standard and requirement of the particular market or business segment. In addition to the quality of the products, the best manufacturing partners foster a culture of collaboration and teamwork. Across both organizations, the leadership provided by key associates is vital to the success of the project. Without a great group of dedicated professionals, the ability to be flexible and maintain the end user’s quality and values will be extremely difficult.
The third critical aspect and perhaps the most essential for success, is simply the ability to add engineering expertise as required. Very few contract manufacturing projects will be as simple as build to print. In many cases, the current internal build process is a combination of tribal knowledge and often outdated or incomplete drawing and engineering data. In most long-term contract manufacturing relationships, an element of product development and even R&D capabilities must be available to facilitate a successful long-term relationship.
The final critical element for success is a robust and dependable supply chain process. Even the best manufacturing and engineering team can be brought to a complete standstill by a disruption in the supply chain. A focused process including collaborative forecasting and visibility into the sales pipeline all lead to sustainable and dependable delivery results. Effective management of customer-supplied materials, logistics and even direct warehousing services, all add measurable value to the relationship. A manufacturing service partner with strong and flexible procurement and logistical skill sets provides a competitive advantage to the combined team.
In closing, every manufacturer looking for a competitive advantage going forward, will need to at least contemplate lowering costs and increasing productivity by rethinking their current state manufacturing process. Outsourcing, or contracting a subassembly element or all of an existing product line is certainly a viable option. The most important success element boils down to the selection of a long-term strategic contract manufacturing partner. The right partner will provide the essential framework to facilitate accelerated growth without adding additional human resources. This combination will potentially offer a huge boost to a manufacturer’s return on invested assets.