The foundation of every successful business is the ability to communicate clearly. Manufacturing, internal operations, marketing, distribution – everything relies on the clear and accurate exchange and delivery of important information. In the case of custom cable manufacturing, outsourcing research data shows that many companies have found that maintaining clear communications with their offshore manufacturers can be very challenging and frustrating.
Numbers produced by BDO Seidman, a consulting company based on interviews of 100 SFOs representing various industries show that in 2008, close to 80% of all businesses where in favor of outsourcing and in 2009 this number was nearly cut in half, declining to 42%. Naturally, you can ask, why such a dramatic change? And the most common answer you will hear is, “We’ve tried but it didn’t work for us.” This certainly doesn’t provide deep insight into the issue but a closer look at individual experiences of failure reveals the pattern of why the results didn’t meet the expectations. The key to this pattern is the lack of clarity in communications and understanding between the outsourcing company and their offshore counterparts.
Three major issues are language barriers, time difference and lack of due diligence in selecting an offshore cable supplier.
Language Barriers
Some of the US manufacturers expressed dissatisfaction and frustration because of the language barrier. Although their suppliers spoke English, there were gaps in understanding that made the communication process difficult. In the environment of technical design and development, any communication gap has a high chance of becoming a costly liability. That is one of the reasons why some OEMs have decided to opt out of offshore outsourcing.
Time Difference
If your supplier is located in China and you are in California, you are looking at about a 15 hour time difference. If you have to communicate via phone or schedule a phone conference with your supplier’s engineering team this can become an issue and if you have to schedule multiple conference calls this will become an ongoing issue. If you add the language barrier to the mix, you are looking at a real big headache.
Know Your Supplier
If you are outsourcing domestically, you can visit your cable assembler facilities, meet their staff and management, inspect quality, study compliance and meet with their engineers quite easily. With offshore suppliers, this is not an easy excursion and you mostly rely on telecommunications and documentation to inspect your business partner’s credentials. Therefore it is very important to gather the necessary information and make sure to visit, inspect and audit the supplying company.
This information is critical to your procurement resolutions. Larger OEMs have standard protocol of supplier approval which involves a step-by-step process of verification of manufacturer’s credentials. Smaller OEMs should also adopt similar processes to ensure the integrity of the partnership with their suppliers.
How To Successfully Outsource Your Offshore Custom Cable Manufacturer
Your procurement department should request the following information from each and every prospective custom cable supplier:
- Documentation that establishes manufacturer’s origin, years in business and ownership.
- Copies of current manufacturer’s certifications.
- Production capacity information (may include the list of equipment used for production, plans and or video footage of manufacturing facilities and production output numbers).
- List of clients and references.
- List of dedicated contacts for engineering support, administrative inquiries, management, logistics, production staff, etc.
- Check if the manufacturer has a local representative you or your engineering staff can easily communicate with in regards to all technical, delivery and business issues. This is important, as a buyer you want to ensure that support is just a phone call away.
- Request samples of the same or similar product. If prototyping is required find out how long it would take to make a prototype.
These are a few steps that could save your company a bundle of money and time on custom cable outsourcing as well as ensuring quality cable delivery on time.
Pay attention to how promptly and accurately your prospective supplier responds to your request. It will give you an idea of how experienced and organized they are.
Outsourcing Myths
Myth One – Lack of Cable Assembly Quality
One of the most common myths about offshore outsourcing is the lack of quality in overseas production facilities. This is a ridiculous statement given the fact that every single major brand outsources electronic components and cables in China or other parts of Asia. Many of them have moved the majority of their manufacturing offshore as well. Just like you can stumble upon poor workmanship domestically you certainly have a chance to encounter it anywhere around the world and that is why knowing your supplier is important.
Myth Two – Inability to Produce Complex Custom Cables
Another myth is that only domestic manufacturers are capable of producing complex hybrid cable assemblies. If that were so, the United States would have become a major manufacturer of automotive cable assembly products but that is not the case. For example, automotive cables are very complex and their design varies from one car model to another. The Complexity of the cable assembly is not the issue, it all comes down to establishing clear communications. If both buyer and cable manufacturer are working on the development and prototyping of a complex hybrid cable or a wire harness assembly and there is a gap in communications, chances are that there will be frustration and the project will be assigned to someone who can clearly follow instructions. Therefore the communication integrity is a major factor, not the quality control or manufacturing capacity of the cable assembler but their ability to understand the dialog and follow exact specifications and orders.
Myth Three – Proprietary Information Security
Myth number three – the inability to secure proprietary information. Some outsourcing projects may involve disclosure of sensitive materials which contain proprietary information. In such cases, the OEMs have to secure its intellectual property through legal instruments. However, the notions that offshore manufacturers are on the lookout to steal any new technologies are not true because most of the latest consumer product models are designed and produced offshore. However, It is recommended that OEMs share only as much information as needed to get their parts manufactured.
Myth Four – Frequently Missed Deadlines
The danger of missing deadlines when dealing with an offshore manufacturer is another myth. If you look at the global trade and global manufacturing supply chain you will see that most of it involves international offshore partnerships. The most common reasons for missed deadlines are not the distance or the manufacturing capacity; it’s the wrong choice of suppliers. If your manufacturing partner is experienced in logistics and has an excellent track record with major manufacturers, you have the same chance, or better, of getting your parts on time from anywhere in the world as you would getting it from a source located in the same county. Think about it, if missed production deadlines would be a common problem with offshore outsourcing all, major manufacturers would stop outsourcing immediately because breakdowns in production would quickly offset the savings.
If an OEM’s procurement strategy is only based on the lowest bid without checking its supplier thoroughly, then the chances them of running low on manufacturing assembly components may increase. While saving money through offshore outsourcing, one should not dismiss the consideration of reliability of their supplier just like with domestic counterparts.
Conclusion
Are offshore outsourcing numbers decreasing? Not according to the increase in global trade volumes. Can medium and small size businesses successfully outsource offshore? Absolutely! If smaller businesses will adopt a more effective outsourcing and supplier approval protocols they can and will benefit from worldwide manufacturing. Will offshore strategies change in the future? Yes, the cost of labor and the cost of production is a major consideration for most companies. Higher expectations of US OEMs will result in the adherence to higher standards amongst offshore suppliers who are willing to maintain their global competitiveness.