When done correctly, it is an irrefutable fact that manufacturing your product in Asia is more profitable than having it manufactured anywhere else in the world. However, because of language, and cultural barriers and the great distance between the client and Asia, the number one problem companies experience with Asian subcontractors is inadequate governance which accounts for the vast majority of problems encountered between the customer and supplier. We have to manage our subcontractors as we would our own factories.
5/19/2011
Outsource Management Pain Level Mitigation
How do you mitigate the pain level managing your subcontract manufacturing? I know what I do and I’d like to hear what you do.
Where’s my lot? What happened to the yield? What do you mean you built my parts without using the specs? Why isn’t the supplier responding to my emails? Why are we paying such high cost and what are our options?
Short story is, we have options-------While these problems can appear to be rather benign on the surface to the most casual observer, there can be catastrophic consequences if left unchecked. One of the most overlooked assets to any company’s outsourcing success is in their ability to react to and resolve issues quickly with their suppliers. Supplier relationships with suppliers play a big part in getting Quality product to market On Time with Competitive Prices.
In addition, companies who internalize the importance of developing and maintaining solid relationships with their suppliers have a much better success rate getting support when needed.
So what’s the best way of improving and maintaining solid supplier relationships? If you’ve ever tried to have a long distance relationship you can understand how distance can have ill effects maintaining solid relationships. It can be done, but by far it’s a minority success rate. Companies who can afford to stage folks near their suppliers typically have a greater success rate in their relationships than those who don’t or cannot afford the luxury. If you are in the latter category of companies, OMS (Outsource Management Services) companies can help. A word of caution outsourcing your subcontractor management; make sure you select folks who have done it before, preferably on the ground near your suppliers and continue to do it today mitigating the pain level.
SOMC is an OMS (Outsource Management Services) company providing operations management for outsourced manufacturing in Asia. Our firm specializes in performance capability improvements, source selection, manufacturing project management, total subcontractor management, and maximizing manufacturing efficiencies improving customer costs. We are intentionally located in the heart of S.E. Asia principally to maximize benefit to our client by being where the action is. In addition, locating ourselves in the same time zone also gives us the unique ability to quickly recognize and begin resolving issues more quickly by not having the common barriers that exist being 8,000 miles away from your manufacturing.
8/02/2010
Inexpensive Outsource Management
Management of your outsource manufacturing does not have to be an expensive proposition and companies can gain the competitve edge and avoid being out-manufactured without breaking the bank.
Large companies manage their outsourced manufacturing by having key people stationed strategically in Asia to manage their interests. Ideally, they should develop real-time working relationships with the subcontractors, and attend to daily hiccups and problems within the same day at the Subcontractors. Good approach, but a huge cash drain with all the extras thrown into the equation, costing $100’s of thousands of dollars per person each year.
Small companies cannot afford the large expense of foreign assignments or the time required finding local talent. In the mean time, they end up using in-house key resources that are pulled from critical projects to attend to the emergency problems and every day business. These people have to fly over to Asia to meet with the Subcons to solve problems, expedite your parts or negotiate with them face-to-face. This can take several weeks out of the year and can be very expensive. While this approach may solve one or two problems at a time, it is more of a fire-fighting approach. You are always working from behind, instead of proactively managing and improving your business.
SOMC is an inexpensive proposition for companies. Our business model was developed to keep manufacturing costs lean. This is why you came to Asia in the first place. How do we do this? Our overhead was designed to be an extremely low cost profile from inception and is primarily due to our efforts, not to carry the cost baggage normally associated with foreign assignments. This model gives our clients best cost possible based on local economies, but with seasoned senior executive level expertise and an acute understanding of the urgency of reacting to your requirements and business culture. Our business model truly sets SOMC apart and makes us unique, as you cannot find this high-level expertise, capable of adapting quickly, at a cost that does not put a drain on the bottom line.
Large companies manage their outsourced manufacturing by having key people stationed strategically in Asia to manage their interests. Ideally, they should develop real-time working relationships with the subcontractors, and attend to daily hiccups and problems within the same day at the Subcontractors. Good approach, but a huge cash drain with all the extras thrown into the equation, costing $100’s of thousands of dollars per person each year.
Small companies cannot afford the large expense of foreign assignments or the time required finding local talent. In the mean time, they end up using in-house key resources that are pulled from critical projects to attend to the emergency problems and every day business. These people have to fly over to Asia to meet with the Subcons to solve problems, expedite your parts or negotiate with them face-to-face. This can take several weeks out of the year and can be very expensive. While this approach may solve one or two problems at a time, it is more of a fire-fighting approach. You are always working from behind, instead of proactively managing and improving your business.
SOMC is an inexpensive proposition for companies. Our business model was developed to keep manufacturing costs lean. This is why you came to Asia in the first place. How do we do this? Our overhead was designed to be an extremely low cost profile from inception and is primarily due to our efforts, not to carry the cost baggage normally associated with foreign assignments. This model gives our clients best cost possible based on local economies, but with seasoned senior executive level expertise and an acute understanding of the urgency of reacting to your requirements and business culture. Our business model truly sets SOMC apart and makes us unique, as you cannot find this high-level expertise, capable of adapting quickly, at a cost that does not put a drain on the bottom line.
6/22/2010
Manufacturing is a Competitive Advantage – Why Should you Care?
Margins are ok, the factory and subcontractor are making deliveries to customers, and quality is acceptable, what is the big deal? There is no big deal until margins begin dwindling, deliveries start to miss, and quality starts lagging and affects re-orders and reputation.
If your company has a large percentage of new product delivery with high margins or your company has higher percentage of legacy products with nominal margins, you need to pay attention to your manufacturing operations and cost to be able to extend the life of your high margins and/or become more competitive in the legacy products.
You cannot survive the competition without a manufacturing advantage. Do you want to compete or dominate your market?
Making manufacturing a competitive advantage cannot be accomplished by visiting your virtual factory once a month, a quarter, or twice a year. This is not managing manufacturing; this is a visit to Asia. It can only be accomplished by managing your manufacturing operations on a daily basis. This is how successful companies get successful and stay successful. They develop outstanding working relationships with subcontractors, they get the best cost, delivery, and quality available, and they work closely with the subcontractors on yields, cycle time, and process improvements, etc., to continuously reduce cost. This is what SOMC does for its’ clients. We have done it before and we continue to do it today
Someone will always jump on a good product and discover ways of making it better and cheaper. Why leave your new technology to those not quick enough to develop it first, but are more competitive and certainly smart enough to know how to improve on it from a manufacturing cost, quality, and delivery standpoint? This is why smart companies understand how important manufacturing is to the company as a competitive advantage and SOMC can help you avoid being “out-manufactured”.
Henry Ford said, “Competition is the keen cutting edge of business, always shaving away at costs”. This is true; keep your margins high by continuous improvement in your manufacturing operations. Your customers will want good quality at cheaper prices. As your ASP’s erode, you will need to be ready with the absolute best manufacturing practices available to you. This is manufacturing as a Competitive Weapon.
“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large”, Henry Ford again. This literally translates to best cost, best delivery, and best quality. The best thing your company can do to get on top and stay on top is provide your customers with world-class service before they know they are not getting it from you.
SOMC can help you develop your competitive advantage and deliver performance to your customers.
Click on the SOMC logo to the right for more information;
If your company has a large percentage of new product delivery with high margins or your company has higher percentage of legacy products with nominal margins, you need to pay attention to your manufacturing operations and cost to be able to extend the life of your high margins and/or become more competitive in the legacy products.
You cannot survive the competition without a manufacturing advantage. Do you want to compete or dominate your market?
Making manufacturing a competitive advantage cannot be accomplished by visiting your virtual factory once a month, a quarter, or twice a year. This is not managing manufacturing; this is a visit to Asia. It can only be accomplished by managing your manufacturing operations on a daily basis. This is how successful companies get successful and stay successful. They develop outstanding working relationships with subcontractors, they get the best cost, delivery, and quality available, and they work closely with the subcontractors on yields, cycle time, and process improvements, etc., to continuously reduce cost. This is what SOMC does for its’ clients. We have done it before and we continue to do it today
Someone will always jump on a good product and discover ways of making it better and cheaper. Why leave your new technology to those not quick enough to develop it first, but are more competitive and certainly smart enough to know how to improve on it from a manufacturing cost, quality, and delivery standpoint? This is why smart companies understand how important manufacturing is to the company as a competitive advantage and SOMC can help you avoid being “out-manufactured”.
Henry Ford said, “Competition is the keen cutting edge of business, always shaving away at costs”. This is true; keep your margins high by continuous improvement in your manufacturing operations. Your customers will want good quality at cheaper prices. As your ASP’s erode, you will need to be ready with the absolute best manufacturing practices available to you. This is manufacturing as a Competitive Weapon.
“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large”, Henry Ford again. This literally translates to best cost, best delivery, and best quality. The best thing your company can do to get on top and stay on top is provide your customers with world-class service before they know they are not getting it from you.
SOMC can help you develop your competitive advantage and deliver performance to your customers.
Click on the SOMC logo to the right for more information;
6/06/2010
Tools of the Trade
It never ceases to amaze me, how companies approach solving their manufacturing problems without using the right tools. Critical to developing and maintaining your manufacturing to perform at world-class standards is, how we look at the problem itself and the approach we take to solving problems.
When I sit in a meeting to solve a manufacturing problem and listen to what is being done to address it, I expect to see an overall graph depicting the indices having the problem. Then, I would want to see a breakdown of the issues associated with the bad indices in a Pareto chart of the defects. Lastly, I would look for action plans based on the Pareto chart to address the specific corrective actions. In the actions, I expect to see not only who is going to do what and when, but also what impact will the action have on the Pareto chart and the overall indices. I am never surprised to see that not only do managers not use Pareto charts to further breakdown the problem, but also they fail to ask when the actions will be complete, not to mention what the impact will be. Without understanding what affects the action will have, there is no way to understand how to prioritize the actions or if they will even have an impact.
Using this simple process of a 3 panel slide we can show 1) the problem, 2) what is the makeup of the problem in a Pareto chart and, 3) actions to be done by who and when, and what the impact to the problem will be.
Once we understand the problem, we can then apply the projected impacts to the chart in the form of our improvement forecast on the overall indices graph and track our progresst. This is an excellent way to keep your group on track with real fixes that have a positive impact on your problem and to communicate within your group and management describing how and when you plan to fix a problem and the expected results.
If you wish more details on the subject, please don't hesitate to contact me.
When I sit in a meeting to solve a manufacturing problem and listen to what is being done to address it, I expect to see an overall graph depicting the indices having the problem. Then, I would want to see a breakdown of the issues associated with the bad indices in a Pareto chart of the defects. Lastly, I would look for action plans based on the Pareto chart to address the specific corrective actions. In the actions, I expect to see not only who is going to do what and when, but also what impact will the action have on the Pareto chart and the overall indices. I am never surprised to see that not only do managers not use Pareto charts to further breakdown the problem, but also they fail to ask when the actions will be complete, not to mention what the impact will be. Without understanding what affects the action will have, there is no way to understand how to prioritize the actions or if they will even have an impact.
Using this simple process of a 3 panel slide we can show 1) the problem, 2) what is the makeup of the problem in a Pareto chart and, 3) actions to be done by who and when, and what the impact to the problem will be.
Once we understand the problem, we can then apply the projected impacts to the chart in the form of our improvement forecast on the overall indices graph and track our progresst. This is an excellent way to keep your group on track with real fixes that have a positive impact on your problem and to communicate within your group and management describing how and when you plan to fix a problem and the expected results.
If you wish more details on the subject, please don't hesitate to contact me.
5/25/2010
Jerking Manufacturing Around
“Jerking manufacturing around is cost effective” are you kidding? Believe it or not the director of planning, of what has turned out to be a successful midsized company, made this comment more than once. Albeit, this statement was made a few years ago and you guessed it, he is no longer with the company.
When I heard this statement coming from the mouth of a senior director in the company I was, needless to say, floored. There may still be people out there that think this way coming from whatever logic they have conjured up in their minds, but thankfully the business educated prevail.
Jerking your manufacturing around is like saying cost is no object in manufacturing. It would have been interesting to see this guy talk about the jerking manufacturing around and the inconsequential cost of manufacturing to Henry Ford while he was developing his high volume automation in the day.
If you have folks in your organization that subscribe to this thinking I want you to know it’s wrong and you have options to the ” jerk around manufacturing theory” with our company www.semiconoutsourcemgmtco.com .
When I heard this statement coming from the mouth of a senior director in the company I was, needless to say, floored. There may still be people out there that think this way coming from whatever logic they have conjured up in their minds, but thankfully the business educated prevail.
Jerking your manufacturing around is like saying cost is no object in manufacturing. It would have been interesting to see this guy talk about the jerking manufacturing around and the inconsequential cost of manufacturing to Henry Ford while he was developing his high volume automation in the day.
If you have folks in your organization that subscribe to this thinking I want you to know it’s wrong and you have options to the ” jerk around manufacturing theory” with our company www.semiconoutsourcemgmtco.com .
4/27/2010
What is the number 1 reason for businesses to outsource anything today?
In the “old days”, 10-15 years ago, cost was the number one motivator for outsourcing a variety of business operations. Cost may very well be on the top 10 list of reasons to outsource today but more and more companies have discovered other benefits for outsourcing their manufacturing and other business operations. Here are a few of the other benefits:
1. Access to other technologies
2. Reduced in-house capital equipment expenditures
3. Allowing corporate to focus on developing/marketing new products rather than fixing manufacturing issues
just to name a few.
Cost is not the only reason we outsource today, for sure. Companies have found the benefits to increased profitability not only lies in the immediate returns that were initially gained in outsourcing but using outsourcing allowed them to focus and develop aggressively to hit their markets harder with new products while essentially relying on other companies to do their part of the process which supports the bigger strategic picture.
Typical functions outsourced have been IT, HR, design engineering, recruiting and so on. It’s time for companies who outsource their manufacturing to realized more benefits can be had by outsourcing their subcontractor governance functions as well. To do this successfully you need to find people that can quickly align and understand your corporate culture, someone on the ground where your manufacturing is and people who have a demonstrated record of accomplishment in operational improvements.
1. Access to other technologies
2. Reduced in-house capital equipment expenditures
3. Allowing corporate to focus on developing/marketing new products rather than fixing manufacturing issues
just to name a few.
Cost is not the only reason we outsource today, for sure. Companies have found the benefits to increased profitability not only lies in the immediate returns that were initially gained in outsourcing but using outsourcing allowed them to focus and develop aggressively to hit their markets harder with new products while essentially relying on other companies to do their part of the process which supports the bigger strategic picture.
Typical functions outsourced have been IT, HR, design engineering, recruiting and so on. It’s time for companies who outsource their manufacturing to realized more benefits can be had by outsourcing their subcontractor governance functions as well. To do this successfully you need to find people that can quickly align and understand your corporate culture, someone on the ground where your manufacturing is and people who have a demonstrated record of accomplishment in operational improvements.
Subscribe to:
Posts (Atom)
