Beware of Outsourcing Risks

everything has risk, so you have to pay attention.

I m wiaiting to listne to your story about it.

Hahaha....... Make sure your drawings and specs are clear, complete and accurate with respect to what is really needed. This is easier said than done. Remember your potential for disaster has a proportionality function with respect to the distance between the supplier and the customer. And the exponent for that function is likely somewhere on the north side of +1.0.

The industrial world is full of horror stories about poor engineering documentation. It's bad enough when the engineer and the machinist eat lunch in the same cafeteria. How about separating them by 10 time zones, 2 or more companies and different nations, cultures, languages and commercial legal structures?

Ed Weldon

The Chinese will pick up on the first minor mistake you make and use that as a basis for a breach of contract dispute, which they then consider gives them the right to steal your Intellectual Property for their own purposes, which position, incidentally, will be fully endorsed by the Chinese courts - assuming you can even get a case heard in a Chinese court, never mind assuming a foreigner could ever win a case in a Chinese court if it's against a Chinese national and it concerns American or Japanese Intellectual Property.

The same would apply to Europeans but they don't have the guts to challenge Chinese Intellectual Property theft anyway, they are too far into the Chinese to realise it's themselves who are being screwed.

With International trade any business transaction between two countries can be heard in the courts of either country because of the little clause called "Minimum Contact."

France has regulations for the types of advertising that can be conducted in that country. Microsoft had advertisement for their product on the internet that a French citizen got access to that was in violation of French laws. France sued Microsoft for the violation and was ordered to pay penalties.

Now it is up to Microsoft to respond. Microsoft appealed the ruling in the U.S. Court and won because Microsoft operated in the United States and didn't break any U.S. laws.

Janissaries, you said:

With International trade any business transaction between two countries can be heard in the courts of either country because of the little clause called "Minimum Contact."

You've obviously never done business in China.

They claim they're in the WTO when they demand open markets to sell their exports into but the WTO rules don't apply to their internal affairs.

Funny that, isn't it.

a while back i wrote about the problems locksmiths have when faced with the job of rekeying locks which have been made in china. what i did not include was something you may or may not have intended to touch on, the problem of the threads that are used to mount the english german american yale brand vertical dead bolt locks. the problem is they are english measure in the case of the british and american made locks 1/20 thread that is not to much of a problem with the german made products at 6.2.mm but try putting the same makers products part number i.d. on the package matches with the chinese product, it will not go together. explaining to the manager of a motel out in nebraskas' upper west slobovia at midnight just before a snowdown comes is a real son of a bishop of a job. because you dont know or cant see why they wont thread together. yale won't tell you though that the problem lies in the bolt size, just like it does in wheel chair lifts and barbeques, it is not 6.2 mm or 1/4 20 threads your are dealing with they are 6.0 by variable tpi sizes the locksmith or any other trade is now facing.

'i can back this up with a rticle that was printer a few years back in the the professional locksmith magazine and what happened to the products made up in canada when the chair lifts made by a ontario county company started falling apart in use.

'da ber

Wow, It sounds that you have a great deal of trade with chinese. What are they?

Are you making money from the exchange?

What is WTO? is it a rule of business or politics? and what is internal affairs?

of cause they are the different meaning between the two concepts. arent they?

cnpower, you said;

"of cause they are the different meaning between the two concepts. arent they?"

I rest my case.

I think at some point those who have done business with China have had different experiences and that your experience is not necessarily gospel. Not that it hasn't happened, but I believe this forum is for understanding things at different angles and getting feedback, instead of belittling others for the sake of being right. Annaesthetised, this site has many helpful tools that I believe you could utilize for your people skills.

Have a nice day.

when will you present the rest of the article?

'da ber

The Negative side to outsourcing is when you're under the gun to meet deadlines and the parts come in are wrong.

Then you're faced with the problem of fixing the parts yourself and back charging or having them come get the parts and correct their errors. Both of which cost time.

The + side to this is that the rework comes out of the vendor's pocket.

Put aside all the newspeak, gimmicks and fads for a moment and remember the foundation of good outsourcing is and always will be:

1. Drawings, specs and contracts which are complete, accurate and mutually understandable.

2. Verification of supplier capabilities prior to contract execution.

3. Independent verification of supplier conformance to specification on all orders for goods and services.

4. Completion of contract terms by both parties to the contract. (That includes paying for the stuff. If the corporate treasurer thinks that putting vendors in the position of having to sell their receivables is a good strategy and hasn't told this to the materials manager yet then it may be a good idea to rethink the outsourcing program a bit)

5. Finally and most importantly outsourcing must be adding to your bottom line both tactically and strategically.

Ed Weldon

No contract is worth the paper it's written on if one of the parties doesn't recognise the laws that the contract is bound by and their courts back them up.

The Chinese can and will sign anything you want them to sign, and they will say anything you want them to say, but if they want to break what you think is an agreement, but what they understand is simply a licence to steal your Intellectual Property, and you can't enforce that agreement in China - and you certainly can't enforce it in the US - what good are all your drawings, specifications, contracts, due diligence?

I am currently sourcing vendors for aerospace machined components.

#1-researched current qualified vendors

#2-letter of introduction including a one page QA desktop audit, request of customer list and possible references. Included a deadline for reply.

#3-review responses and select 3 preferred

#4-forward quote package

#5-internal quality and process audit within 3 days of quote package

#6-award contract to one (or two) vendors

#7-cross your fingers as you receive the first product

Finding good resources is difficult. It seems you need to be a parent to them because you simply do not have control over their internal workings. The best QA and production vendors can change over night with the loss on an operational manager. Continual audits or even regular visits seems to be the only way to keep on top of it. Just because their banner reads ISO or AS there is no assurance your product is good.

your last sentence says puts the w.s.l. of it into perspective well done.

gedevine -- I hope you or a senior manufacturing engineer member as well as a supplier contract administrator from your group are the ones to do that audit. If your company can't afford to do that then perhaps it's time to broaden your perspective lest is some future reflective time you find yourself looking in the mirror at a fool.

Ed Weldon

Lets face it everyone, outsourcing is done purely for financial reasons, not quality reasons. When the money men of the world realise that quality = repeat business and thus lack of quality does not equal repeat business then the world will change.

I would much rather buy good quality items at agreater cost knowing that they work right first time.

lastoneleft -- Perhaps the "quality=repeat business" formula will work in the UK, a place where I've always thought there is some sense of the breadth of time. But here in the colonies the money men care little about the repeat business after this quarter. By that time they will have cashed out their stock options, inflated their PR portfolios and moved on to leave some new guy with a wonderful opportunity to repeat the "cycle of success".

I remember some years back talking to an old time railroad employee and him telling me about the "Builder-Spoiler cycles of management that would run to 30-40 years to repeat. Only thing new about that sport is that it seems to have infected all manner of businesses, even the small ones, and the frequency values have gone up by an order of magnitude.

Remember, rust never sleeps. It is actually your friend; it provides gainful employment for your children.

Ed Weldon

Dear Ed,

I am sorry to hear that life in the colonies has got as bad as that. There was a time when people could look forward and see a prosperous world where we could envisage a tomorrow where our children could be gainfully employed. We have all had the dreams where there are no more dirty jobs and that we can all work for a common goal and where a fair days work recieves a fair days pay. Unfortunately these dreams can no longer be commented upon because some corporate fat cat holds the intellectual property rights to them and all of the realities have been outsourced. Still at least we can all watch the world go down the same toilet at the same time!

Companies seeking to benefit from manufacturing in a low-cost, low-risk environment, while completely controlling their core competencies, should consider utilizing the services provided by The Offshore Group. The Tucson-based Offshore Group has been enabling companies to operate in Mexico since 1986 under its ISO 9001:2000 registered Shelter Plan: www.offshoregroup.com

Thats a new take on this discussion, having an ISO 9000:2000 quote for outsourcung. Unfortunately those in the know will be able to see a smoke screen, ISO 9000:2000 is a quality standard that defines a type of quality system. It does not however mean an increase in the real quality of items, just defines how to deal with the complaints. In real terms a company that seeks to outsource their manufacturing for commercial reasons risks the one thing that they have worked hard for and can be lost overnight, their reputation. Now personally I work for a laboratory performing tests on textiles, my personal reputation is very good, however my company has a poor reputation with certain people in our far east operations. My work is good but the cheaper area, the far east, has a poor attitude and affects the good reputation that I am attempting to build. Not exactly outsourcing, but pretty close, in this instance we have outsourced our reputation.

The technology industry, more than most others, relies heavily on telecommuters who can just as easily fire off e-mails and work on documents or program code in their slippers at home as they can sitting in their cubicle at the office.

Telecommuter advocates were quick to blast the decision.

harie

outsourcing uk jobs