Outsourcing has become a way of life in manufacturing companies I'm afraid. Having worked a lot of years there myself, it makes me a little sad. It is an easy out for managers who sometimes only look good by making others look bad, and fail to address the internal problems that make things more expensive. We can, and do often make things better, and cheaper at the same time right here in the good old USA. There was a good story about Ariens ( I am pretty sure) in a trade journal a few years ago. They are a family run business of the old school, but things weren't going so well for them. Costs were rising, and of course companies like Kubota were giving them a run for their money. So, they decided to outsource some mower parts to China. What they found was that there was a 40% scrap / rejection rate, and they sure couldn't send parts back for rework, and still save any money. They were doing a lot of rework in house. Then they hired a couple of young engineers that had a plan. They rearranged machinery, found the source of the problems, and brought the production back in house. By going to China they had saved something like $100,000 a year on the parts but lost much of it in rejected parts, and rework costs. After the re do by the engineers they actually saved almost $100,000 a year over the cost of outsourcing, and the quality was very good. If I remember right rework was in the low single digits. It was a great story, and proved what I had thouht all along. The crusty, supreme exhaulted dictator
I say that with much respect, who started, and ran the company I worked for said once that all the labor in one of the products that we manufactured was only 8% of the cost of producing that item. If labor costs were doubled it wouldn't have had that much impact on our profits.
So yes, outsourcing is here..... in a world of blame based failure justification. It just puts the folks to blame further away, and even makes that part easier.
