Steps in Engineering Outsourcing : What goes out – must come back

Given the interest in an earlier post on engineering outsourcing its timely to think about the steps of engineering outsourcing and keep in mind that what goes out must come back! Here are the most basic steps of the engineering outsourcing process:

  1. Core competence: As discussed in several articles innovation and intellectual property is best managed if the organization has a clear sense of how the outsourced work fits into its core competence. Simply speaking – core competence is what you can do better than other competitors in terms of cost,quality and customer satisfaction. Whether it is engineering design or drawings – outsource only those parts that are not too close to what what makes you special.
  2. Selecting vendors: capable and responsive vendors make all the difference and finding them,developing them,encouraging them is a complex but satisfying process. Be aware that whatever vendors you choose you might just get stuck with them as it becomes difficult to "fire" an existing vendor in the engineering services space. So choose carefully but commit completely after the contract.
  3. Manage transition: As pointed out in an innovation and outsourcing article, transition is the phase that is absolutely critical. This is when a transition team from the vendor's organization is trying to understand the task at the outsourcing organization's office. What exactly is to be done? Who will assign the work? Who will receive the work and integrate it to the re-configured value chain of the outsourcing firm.
  4. People issues: If some people have to be re-assigned or let go, an active constructive HR process must work. If not, you can hardly expect the existing team to help with a good transition. And after your remaining organization is re-configured … the entire tacit knowledge of your team will be lost. The vendors' performance will be compromised from the start.
  5. What goes out – must come back: Its much harder to specify an engineering service compared to a physical product. You cannot really do a quick quality check of a bunch of engineering drawings. And if you have to check and re-do any parts of the drawings – what was the point of outsourcing in the first place? In other words, recognize that anything that is outsourced has to come back and fit in with the rest of your value/supply chain that is facing your market. The more effort you put in the previous steps- the better will be the outcomes in the last step.

Engineering outsoucing is a great opportunity to speed up innovation. If you can do one drawing in a day in house – you can get 10 drawings done at the same cost and time overseas. The catch is that your existing engineering draftsperson/manager must be able and willing to move up the value chain and co-ordinate the vendor. Doing so can lead to higher paying jobs in America by speeding up innovation – while leveraging worldwide engineering skills now accessible through the Internet. Contact StratoServe.