Cover Story: Rising to the Challenge of the Outsourced Supply Chain

Five success factors for outsourcing your supply chain


It probably didn't hurt that the company's senior management was quite familiar with the contract manufacturing world. CEO Richard L. Rowe, a longtime Honeywell veteran, also was formerly the chief executive of MCMS, a $550 million global electronic contract manufacturer (CM) that was sold in January 2002 to Plexus Corp., an electronics manufacturing services (EMS) company based in Neenah, Wis. And Meyer, with 25 years in industry, had spent 20 of those years in the contract manufacturing world.

Drawing on that experience, Meyer says that the first thing SafeView did as it plotted its outsourcing course was to identify the skill sets that would be necessary to bring its product to market. "The way that I approached it was to understand what our needs were going to be," Meyer says, "because the way I looked at it, either I had to hire a skill set or a contract manufacturer had to hire that skill set." Understanding the skills requirements is fundamental not only to selecting an outsourcing partner, but also to communicating expectations to the partner, both at the start of a project and, as important, as the project evolves, requirements change and the outsourcing partner has to bring on new capabilities.

2. Focus on the Relationship Of course, technical requirements, capabilities and skills sets are, ultimately, something that either your own company or your outsourcing partner can acquire. So while these attributes are not unimportant in selecting among potential partners, the synergy between an OEM and its contractors should be the top priority, Meyer believes. "To me, one of the most important criteria in picking out partners was a strong relationship that would withstand all of the unknowns," she says.

In SafeView's case, the unknowns were plenty, since the company was building a unique product that had never been brought to market before, and they planned to do it within a very short timeframe. "We were embarking on this incredible experience, we had this journey ahead of us and we had no clue what we were going to find," Meyer recalls. "So having a really good relationship was key." After reviewing its options, SafeView elected to work with Plexus, a well-established EMS that has facilities around the world, including a Boise, Idaho-area plant that was selected to build the SafeView product.

Working with Plexus, SafeView designed and delivered the first Beta version of the SafeScout in February 2004, just nine months after receiving its initial funding. In short order, the company delivered another five Beta units to its customers. With units now in the field, SafeView began to receive a tremendous amount of feedback from its customers on the initial units, much of which had to be translated into engineering changes for the next generation of the SafeScout. "I think that we as a company weren't prepared enough for the level of design activity and change that was going to happen driven by customer demand," Meyer says.

And this is where the focus on the relationship with Plexus became critical. Because SafeView was looking to have a long-term alliance with its contract manufacturer, the company took the approach of acting as a filter for all the feedback coming back from the field, rather than just throwing all the design changes over the wall and expecting Plexus to contend with all the necessary engineering changes that had to be made. "So many start-ups go through the initial phase with their contract manufacturer, and by the time they're ready to go into production, right at the moment when the start-up needs its CM the most, they hate each other's guts and the customer is leaving for another CM," Meyer says. "And it's not the CM's fault; it's just the nature of the beast of going through a product-development cycle. So we tried to filter as much as possible and keep as much churn out of the relationship in the supply chain."

3. Communicate, Communicate, Communicate As with any good relationship, the key to a healthy OEM-outsourcing partner alliance is communication. "It's very important to have an open and honest dialog," Meyer says. "You both have strengths and weaknesses, and everybody knows what they are. We're going to try to leverage the strengths and work around the weaknesses, but we're not going to pretend they don't exist."

  • Enhance Your Experience.

    When you register for SDCExec.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

Already have an account? Click here to Log in.

Enhance Your Experience.

When you register for SDCExec.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

OR

Complete the registration form.

Required
Required
Required
Required
Required
Required
Required
Required
Required
Required
Required