De-Outsourcing LO14002

Bob Adams (badams@MARKEM.com)
19 Jun 97 13:55:15 +0000

Replying to LO13991 --

(in reply to De-outsourcing) "I am excited to see that there are people
agreeing and even quoting that the de-outsourcing trend is already coming
back...... Are there other people who can quote more examples of this
happening?"

I have some experience with both outsourcing and insourcing. We had a
small injection molding process that has been outsourced. Our analysis
showed that it was less costly to outsource when considering 'total cost'.
An insourcing experience happened as a result of looking at our electronic
assembly requirements. We already were splitting work with subcontractors
and hense had the internal infrastructure to support additional work
easily. (note; some call this strategy cosourcing). These decisions were
hard to make. Both broke tradition.

The hardest sell came with the insourcing. As we all know the outsourcing
methodology of the last few years really caught the attention of top level
management. Since most of us deal with capital constraints (excluding a
software giant), not having to feed and water a manufacturing facility
draws a lot of attention. Our analysis centered on total cost which
clearly showed that when we benched marked real cost ( not the inventory
cost !) the least cost decision was INSOURCING ! This has to be handled on
a process by process basis and the plan needs to be worked out with
suppliers so both parties can make the needed adjustments.

We are prototyping an analysis template for making these macro make/buy
decisions on capability based on life cycle costing. Our current thoughts
are evolving to include a cash flow component.

As an aside to enhance the model, how do you apply $$ to lead time
reduction if you cannot directly correlate customer satisfaction and/or
increased sales ?

Please include a reply to me on your findings.

regards,
Bob Adams
Manufacturing Engineering Manager, Systems Division.
badams@markem.com

-- 

Bob Adams <badams@MARKEM.com>

Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>