Interview – (Marketing Manager)
Reason for companies to outsourcing
What are the reasons for companies to outsource their production processes in China?
The subcontractor has particular skills and technologies to produce our product efficiently.
The price of the product from a subcontractor is lower than our in-house production cost.
Benefits of production outsourcing
What benefits have you experienced from outsourcing?
The subcontractor is capable of producing our product more efficiently with a higher quality.
For the peak season, the subcontractor can provide more flexibility in the capacity of production than in-house.
Did they meet your expectation?
For the first time of cooperation with a subcontractor, it is not easy to meet expectations entirely. It takes some time to improve the relations through continuous communication.
Problems in production outsourcing
Have you experienced any problems as you progressed through the outsourcing arrangement? If yes, how did you overcome them?
We have experienced a quality problem, which we had to discuss with the subcontractor in terms of the inspection report. Additionally, we required the subcontractor to produce replenishment for the future improvement.
Moreover, we faced with the order delay problem. To prevent the order delay problem in the future, we decided to take action according to our previous experience. In particular, we will give the production lead time buffer to the subcontractor.
What have you learned from the problems that you experienced?
My experience of working with subcontractors is mostly positive. However, occasionally some subcontractors required increasing the price when they started mass production, even when we had already signed the contract and confirmed the product price.
How does outsourcing influences quality management?
We assign our in-house quality control to visit our subcontractors and perform onsite production quality control. We make sure that the semi-product in the manufacture line is of a high quality.
How does outsourcing influences supply chain management?
Some subcontractors will share or introduce some potential business partners, such as logistics service providers or raw material suppliers. It can reinforce our supply chain network.
How does outsourcing influence the management, team?
Outsourcing can diversify our business nature; marketing department can have more opportunities to develop our customer needs. It will not be limited by our current production capacity. Outsourcing can provide a wide range of product lines.
Due to outsourcing, the company can provide flexibility production capacity; it is a working solution to the capacity problem during the peak season.
We have to arrange an onsite audit to our subcontractors and to check whether our subcontractors can meet our requirements.
Success factors
What factors do you think need to be taken into consideration to ensure a successful outsourcing arrangement?
It is important to maintain a stable subcontractor and keep a good long-term relationship with this person.
Moreover, a successful outsourcing arrangement presupposes keeping a reasonable price, which requires us to get the quotation from other subcontractors to compare the price with the current subcontractor.
How do you measure the successfulness of an outsourcing arrangement?
We get a performance report from every subcontractor. This report is based on each order of production sample lead time, our requirements or feedback on problems, production lead time and defective product rate. We will review …
