Attributes of a Good Outsource Manufacturing Partner

Careful consideration must be given whenthey look at the local environment where
choosing and working with an outsourceprospective outsource supplier's facilities are
manufacturing partner. Although each situation islocated to confirm not only that it is in good
unique, there are common characteristics thatcondition but also to be assured the location is
make for a reliable outsource partner.safe.
One company that carefully analyzed theAdditionally, VIASYS chooses their facilities based
determining factors of a successful outsourceon how well their manufacturing practices are,
partnership is VIASYS Healthcare, a global leadersuch 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 userating, 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 solidchain group outsources for a minimum of two
history of innovation, superior productyears within each country for the longevity of
performance, and a commitment to customereach product. They feel that two years gives
service, yet they achieved this success whilethem a good idea of the type of service and
outsourcing more than 75 % of the assembly ofquality they receive.
each of its product lines. To complicate mattersStill risk exists for VIASYS and they must
even more, VIASYS currently outsources tomitigate this risk with vigilant measurement and
Canada, Mexico, the United Kingdom, Germany,management involvement. There are risks
Italy, China, and Thailand. Their two biggestinvolved 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 aThey carry safety stock for most of their
huge task and required them to create a criterionproducts. For example, they store three-month
matrix to choose and measure their differentinventory instead of one-month supply. VIASYS
outsource partners. After careful consideration,also carefully segments their market, which
they focused on four major criterions: Quality (theprotects them by not assigning too much control
most important), Cost Savings, Workto 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 andensure appropriate internal control.
control tests are done for each product by theAdditionally, VIASYS has a very open mind and is
team of Operations and a team of Supply andwell aware of their social responsibilities. They
Quality engineers. If the products do not pass thework with the outsourcing facility to ensure that
control tests, the product is discharged. Productthe workers are working under good working
testing and inspection is very critical for VIASYSconditions and there is no child labor involved.
since they provide health care products thatVIASYS 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 ofThis example of successful outsourcing is not
ownership when making a decision whether tonecessarily unique but it is definitely a Best
outsource a product or not. For example, onePractice. Outsourcing is a trend that continuously
high-volume consumable cost $5 to produce inevolves and is driven by the relentless push for
California and in China it only costs $.50. In thislow cost, quality, and improved profitability. To this
case a 90% percent savings justifies theend choosing and managing your outsource
significant investment and risk of sourcing from apartner is a critical element of a successful
geographically remote supplier.partnership.
Work Relationship: VIASYS chooses to outsourceDr. Joe Greco is Director for the Center for the
with reputable companies. In addition, theyStudy of Emerging Markets (CSEM) located in
maintain continuous communication with theFullerton, California. As part of the College of
outsourcing facilities through weekly programBusiness and Economics at California State
management and conference calls in addition toUniversity, Fullerton, CSEM was established to
one on one telephone conversations, all of whichpromote the flow of global information and
are facilitated after hours to accommodate thetechnology between the academic and business
different time zones.communities. In particular, CSEM studies offshore
Geography: VIASYS looks at the currentoutsourcing and it economic and cultural impact on
economy of the country as well as the politics inUS based emerging markets. You may contact
order to give them an idea of the current statusDr.
of the local health of the geography. In addition,