Outsourcing is a new term for something that manufacturers have been doing and continue to do since the beginning of time.  No matter what anyone says every manufacturer out sources products or parts of its products.  If you manufacture garments, you probably purchase fabric, buttons, thread, and zippers.  If you manufacture a piece of electronic equipment, you outsource the manufacture of the wire, connectors, electronic components, and cabinetry.  Any time you contract with another company to provide you with a part or labor that will allow you to complete your product you are outsourcing.

The key to successful outsourcing is to have the appropriate procedures in place to deal with product made in someone else’s facilities.  This includes:

• Qualifying the outsourcing company prior to contracting with them.

• Providing them with easy to understand and detailed information with respect to what services you require them to perform.

• Implementing a QA/QC procedure that verifies that they are performing, as you desire.

If you are contemplating outsourcing to manufacturers in countries such as China, Mexico, Thailand, or Malaysia you have to take into account the added expenses that will be incurred due to language, communications, freight, import costs, and quality control.  Coupled with this are the costs associated with the return or rework of parts received and the potential problems of late deliveries.  In many cases, outsourcing to third world companies can be a penny wise, dollar foolish exercise.  Remember that many companies jumped on the outsourcing bandwagon only to bring their production back home a few months later.

My recommendation is to scrutinize the financial numbers and the overall impact on your ongoing business before you proceed.  If your due diligence indicates that outsourcing is indeed the way to go, start slowly if possible, in other words do not turn your entire production over to an outsourcing company over night, but rather phase it in.