| Careful consideration must be given when | | | | they look at the local environment where |
| choosing and working with an outsource | | | | prospective outsource supplier's facilities are |
| manufacturing partner. Although each situation is | | | | located to confirm not only that it is in good |
| unique, there are common characteristics that | | | | condition but also to be assured the location is |
| make for a reliable outsource partner. | | | | safe. |
| One company that carefully analyzed the | | | | Additionally, VIASYS chooses their facilities based |
| determining factors of a successful outsource | | | | on how well their manufacturing practices are, |
| partnership is VIASYS Healthcare, a global leader | | | | such as higher quality, faster lead time; whether |
| in health care technology. VIASYS manufacturers, | | | | or not they comply with Good Manufacturing |
| markets, and services medical devices, | | | | Practices (GMP) and the ISO standards, company |
| instruments, and medical/surgical products for use | | | | rating, profit capability, and last but not least, the |
| in respiratory care, neurocare, medical systems, | | | | employee-turnover rate. Also, VIASYS supply |
| and orthopedics. VIASYS is known for its solid | | | | chain group outsources for a minimum of two |
| history of innovation, superior product | | | | years within each country for the longevity of |
| performance, and a commitment to customer | | | | each product. They feel that two years gives |
| service, yet they achieved this success while | | | | them a good idea of the type of service and |
| outsourcing more than 75 % of the assembly of | | | | quality they receive. |
| each of its product lines. To complicate matters | | | | Still risk exists for VIASYS and they must |
| even more, VIASYS currently outsources to | | | | mitigate this risk with vigilant measurement and |
| Canada, Mexico, the United Kingdom, Germany, | | | | management involvement. There are risks |
| Italy, China, and Thailand. Their two biggest | | | | involved in all the industries, be it political, social, or |
| outsourcing facilities are in China and Guadalajara, | | | | economical. VIASYS follows various practices to |
| Mexico. | | | | mitigate their risks from unforeseeable factors. |
| Managing this many outsource relationships is a | | | | They carry safety stock for most of their |
| huge task and required them to create a criterion | | | | products. For example, they store three-month |
| matrix to choose and measure their different | | | | inventory instead of one-month supply. VIASYS |
| outsource partners. After careful consideration, | | | | also carefully segments their market, which |
| they focused on four major criterions: Quality (the | | | | protects them by not assigning too much control |
| most important), Cost Savings, Work | | | | to a supplier. VIASYS maintains frequent |
| Relationships, and Geography (the least important). | | | | communication with their suppliers, and employs |
| Specifically, the criterion is defined as follows: | | | | various methods to audit the facilities weekly to |
| Quality: Within each outsourcing facility quality and | | | | ensure appropriate internal control. |
| control tests are done for each product by the | | | | Additionally, VIASYS has a very open mind and is |
| team of Operations and a team of Supply and | | | | well aware of their social responsibilities. They |
| Quality engineers. If the products do not pass the | | | | work with the outsourcing facility to ensure that |
| control tests, the product is discharged. Product | | | | the workers are working under good working |
| testing and inspection is very critical for VIASYS | | | | conditions and there is no child labor involved. |
| since they provide health care products that | | | | VIASYS oversees the whole process; however, |
| consumers rely on for life support. | | | | local customs vary from region to region. |
| Cost Savings: VIASYS studies the total cost of | | | | This example of successful outsourcing is not |
| ownership when making a decision whether to | | | | necessarily unique but it is definitely a Best |
| outsource a product or not. For example, one | | | | Practice. Outsourcing is a trend that continuously |
| high-volume consumable cost $5 to produce in | | | | evolves and is driven by the relentless push for |
| California and in China it only costs $.50. In this | | | | low cost, quality, and improved profitability. To this |
| case a 90% percent savings justifies the | | | | end choosing and managing your outsource |
| significant investment and risk of sourcing from a | | | | partner is a critical element of a successful |
| geographically remote supplier. | | | | partnership. |
| Work Relationship: VIASYS chooses to outsource | | | | Dr. Joe Greco is Director for the Center for the |
| with reputable companies. In addition, they | | | | Study of Emerging Markets (CSEM) located in |
| maintain continuous communication with the | | | | Fullerton, California. As part of the College of |
| outsourcing facilities through weekly program | | | | Business and Economics at California State |
| management and conference calls in addition to | | | | University, Fullerton, CSEM was established to |
| one on one telephone conversations, all of which | | | | promote the flow of global information and |
| are facilitated after hours to accommodate the | | | | technology between the academic and business |
| different time zones. | | | | communities. In particular, CSEM studies offshore |
| Geography: VIASYS looks at the current | | | | outsourcing and it economic and cultural impact on |
| economy of the country as well as the politics in | | | | US based emerging markets. You may contact |
| order to give them an idea of the current status | | | | Dr. |
| of the local health of the geography. In addition, | | | | |