Printing Australia

Subcontracting has become standard practice as many companies seek to focus on their key capabilities in the ever-ending goal to improve profits. Focusing on in-house design and handing off less profitable manufacturing to those who can profit on it has grown into a necessity for many companies. Subcontracting can make both the contractor and the contracted more profitable ? if it is handled right.

Cost is one of the driving factors in subcontracting. Why build the product in house if someone outside can build it faster, cheaper, and better? The problem is that companies often focus on the cheaper and ignore the faster and better.

Depending on the product that a company is trying to produce, there may be a wide selection of commercial houses from which to choose. However, these are companies that generally accept outsourcing business from anyone who can pay; they have no experience with a companyas individual product. Specifications are all well and good, but simply putting them in the hands of the foreman and walking away is virtually guaranteed to waste everyoneas timeiait is very unlikely that you an acceptable product will be produced. The more complex the product, the more unlikely this scenario is. Just because a subcontractor can build a product more cheaply than the business that actually did the design, there is no reason to expect that they can build it better.

Communication is essential. This is true of no matter where your subcontractor is located. Of course, if you subcontract your manufacturing to countries where English is not the primary language, communication can become an even greater problem that exists simply across the corporate divide. It doesnt matter if the subcontractor is down the street or down the globe. A digital camera with a picture of the problem sent to the design engineer in the U.S. with the right answer can solve it faster than flying an engineering team down to the maquiladora. Nor does your particular product type change the basic principle.

One way a large business working with a smaller business can help itself is to improve the communication system internal to the smaller business. Introducing basic computerization is often an asset. For example, small machine shops that worked with a larger company had just started using email. In order to improve communications, the larger company bought them Microsoft Outlook and offered simple lessons. Both companies benefited.

In all industries, there are certain standards that must be met. A small subcontractor may not be able to test to a larger companyas standards, and, particularly when said standards are an industry requirement such as ISO9000 or minuscule mechanical tolerances, this can seriously impact business. A small operation here and there may be able to do this, but it is very much a needle in a haystack situation. However, a larger company may be able to help train quality control staff at a small company. This training benefits both sidesiathe larger company is able to use the smaller, less-expensive company that would not have been able to do the work to the required standards before, and the smaller company now has employees with skills that will be useful in the long-term.

Working with a larger firm with greater demands upon their inspection and test facility often leads to a subcontractor upgrading their test equipment. If possible, this involvement encourages a subcontractor to add a test capability the larger company lacks. Close contact between the engineers at both companies should allow those for the larger firm to be aware of the new capability. Once that capability is known, it would be a good idea to run through your still-in-house processes for any other areas where this new test procedure could help identify currently escaping defects. The smaller vendor would thus gain a faster return on their investment on the equipment upgrade and the larger company gains a testing capability they previously lacked access.

There are many positive outcomes that can come from subcontracting, if it is done correctly. Information, equipment upgrade cost, and opportunities can be shared between companies on both sides. Although it is often looked at only in terms of the short-term financial advantages, improvements in such areas as manufacturing processes and the skill sets of employees can have long-term effects.

< Prev		Next >