In recent years, the commonly accepted wisdom has been that off-shore outsourcing of manufacturing is the way to go. We now know, however, of many companies that have chosen to have their manufacturing done in Asia or South America only to be very disappointed by the results. Some of the less pleasant experiences we’ve heard include:
- “The sample was perfect but the production goods did not meet standards”
- “The supplier gave assurances that the goods would be delivered on time but failed to meet the schedule”
- “The chemical formulation was ‘almost’ right”
- “The order was delayed because the manufacturer gave priority to a ‘huge’order from its best customer“
- “Labeling instructions were not followed properly, resulting in significant charge backs from customers”
- And for anyone who remembers the West Coast dock strike several years ago, “late shipment resulted in a client having 160 containers sitting on boats during the Christmas season, representing 75% of the company’s annual revenue.”
In all cases, these companies were left with a fractured supply chain, the inability to get the right amount of the right product to the customer on time, and in many cases, severe financial hardship and lost business and customers.
If you are, or are considering, outsourcing your manufacturing, it is essential that you have quality and time control at the source. You must have a quality control expert at the plant to ensure that you get what you ordered, labeled properly, and on time. Having the expert there can result in significant financial gain by avoiding the shipment of shoddy or mislabeled product, and at the very least, early warning of production issues or delays in shipment.
Some companies choose to have an employee travel to the manufacturer periodically, while others place an employee there full-time. A third option is to retain one of the reputable QC/QA firms specializing in representing importers at their foreign manufacturers’ plants.
Perhaps just as important is to have plans in place that increase the likelihood your company can deliver product to customers on time no matter what happens.
- First, maintain an extra order cycle on hand of your best selling items only.
- Second, develop multiple domestic sources for back up. Even if the domestic supplier is more expensive, by having multiple quotes in hand (make sure they’re continually up to date), you can activate a vendor with the fastest turnaround time in a crisis or you might spread either products or quantities over several vendors to get required quantities on time. You will lower profits gained from outsourcing, but reduce the chance of not shipping orders and possibly losing customers.
These fundamental measures can head off significant problems before they develop and allow companies to hit, rather than badly miss, their revenue targets.