Wednesday, October 28, 2015

Quality Control Tips for You in Outsourcing Manufacturing Operations

The need to cut costs to meet increasing competition, especially from overseas, is pushing more and more U.S. manufacturers into outsourcing as much of their manufacturing operations as possible. No doubt, outsourcing does have a significant positive impact on production costs and profitability. However, quality issues can arise often, which might affect the reputation of the company and of the product as well, and more importantly the market share of the company.

The Problems

Any materials or products of unacceptable quality entering the supply chain will affect not only the company using it, but also have a domino effect down the line. Rejections due to quality issues can delay shipment by extended periods, often weeks or months. If the rejection occurs at the point of destination, the customer’s ability to complete orders will be drastically affected.

The long back and forth shipment time for returning the materials to the source supplier will increase the delays exponentially. The additional packing and handling costs involved will be unacceptable. Carrying a high inventory to protect against this situation is costly in many ways, and it negates one of the key reasons for outsourcing in the first place.

A Solution

One way of eliminating this problem is to aggressively implement enterprise-class quality control systems at the outsourcing site. However, it involves, at least in the initial stages, collection of data, aggregating and analyzing it, and producing reports upon which action can be taken to resolve issues, and improve both quality concepts and control.  Industry data shows that this effort can reduce the cost of inventory write-off from outsourcing operations by over 5%, and increase revenues by over 2%. However, this effort is not easy and has in itself a huge cost.  The expenses can be so high that the benefits of the outsourcing may be called into question, especially if the process is a long drawn out one.

A Better Option

A more effective option is to start with an outsource manufacturer that has high quality standards and supply potentials to meet customer demands. To find such a supplier, look for the following assets:

Product Compliance:  The Company should be committed to a TQM program and certified to UL, TUV-Rhineland and CSA. The products it manufactures should meet IPC class 2 or 3 standards as desired by the customer.

Defect Reporting Policy: Defect reporting must be done at all levels, and employees should be empowered to provide feedback on the issues they come across. Beyond this, the management must be active in its response to any quality issues that may arise.

Employee Training: Employees should be properly trained to meet IPC Class 2 and 3 workmanship standards. Regular refresher training should be part of the policy.

Quality Certification: The Company should have all the required quality certifications.

Making the decision to outsource can be a difficult process. The idea of giving up control of key operational areas can be frightening, because many things could go wrong. However, it will be of immense help to you to partner with the right outsourcing company endowed with the skills, tools and credentials to inspire confidence in its abilities to meet your quality standards. Then you will never look back, and your business and your profits will always be on an upward curve.

No comments:

Post a Comment