Engineering capacity constraints 3

[veryinterested]

Hi,

We are a small design, manufacturing and engineering firm that produces niche market scientific instruments. Recently we have undertaken several large projects and have hired additional personnel. We are finding our selves still with capacity constraints and need help while managing our overhead. We are considering outsourcing to help in the interim. There are several companies that we can find that are out of country. Has anyone had any experience with this, both positive or negative? Any referrals (if that's allowed), or ideas?

Thanks in advance!

 

[johnsmith2]

We usually outsource to the local consulting companies. Be careful of some oversea companies. Somehow, we told them what we need and the requirements. But the outcome is bad and cannot pass the standard as we need. Then, we need to find our employee to re-engineer their products and designs. It is really time-consuming, but paid is much cheaper in that countries.

You can use $12/hr for 1 engineer in India
$16/hr for supervisor.

 

[KENAT]

Before you outsource, especially abroad, make sure you understand and know how to deal with all the implications.

For instance:

If doing CAD/CAE or similar work what system do you want them to use? For it to be easily maintainable in the future it will probably need to be the same as yours which will start to limit the list of possibilities. This is one I wish my place would learn!

Outsourcing will force you to prepare a more thorough spec/requirement than you may be used to. Things that you do out of habit or to company specific practices & standards will need to be explicitly detailed. This will include reference to any specific design/drawing/industry standards. This may be even more relevant if you’re outsourcing to another country. For instance, maybe you have a formal checking process where a separate, highly qualified & experienced person reviews the designs, they may not; if you don’t list this as a requirement how will they know?

Also, and especially if outsourcing to another country, consider things like ease of communication & liaison. Do you need a secure electronic data transfer system (secure FTP, encrypted email etc). Will there be a language barrier, it’s one thing being able to speak enough English to pass an exam, quite another being able to hold a technical conversation on the phone and/or write technical documents etc. Back in the UK I had enough trouble working with some US companies, let alone the Italians (don’t get me wrong their English was much better than my Italian but it could still be hard work). Will any time difference be a factor having to stay late or come in early for conference calls gets old. Also consider any cultural differences which may be a factor.

Apparently trivial things like the US using inch and most other countries using metric can be an issue. Also your standard supplier for common items (e.g. McMaster Carr in the US) may not be the one they’d use (e.g. RS Catalogue in UK). It’s one thing to get them to design in the correct units, quite another to get them to source components in the right units that are also available to you locally when you come to build them (if applicable).

Intellectual Property Rights, consider the need for NDA/Confidentiality agreements, other countries may not be governed by the same rules as yours. Also are there any export compliance issues? If in the US you may be surprised by what you need clearance to export.

What if any special legal/financial considerations are needed for dealing with a foreign company other than those above. Will the contract be in your currency or theirs.

I don’t mean to rain on your parade but places sometimes rush into these kind of things without thinking them through.

If it’s your first experience with outsourcing I’d try to get a local (or at least same country) company first, so you can get a hang of the general principles & practices, before adding the complications of a foreign company.

Is getting temporary contract staff a better option?

 

[MikeHalloran]

I used to work for a major medical electronic instrument manufacturer. We got into some kind of deal, where we set up a production line, and shipped 500 kits of parts to be assembled in China and sold into the domestic Chinese market. That was supposed to be the initial inventory to set up a final assembly plant, with monthly shipments of similar size to follow, with substantial amounts of money coming back to us, for our core component products and knowhow, etc. Speaking of knowhow, some idiot contracted to ship a complete set of component manufacturing documents in addition to the assembly instructions.

We never heard from them again. I don't think they even paid for the parts they got, much less the IP we threw in.

;---


Your mileage may vary, but it's not hard to find examples of unintentionally funding the startup of a competitor by outsourcing manufacture of your own stuff.


;---

That said, you might consider outsourcing domestically, so you are at least dealing with the same set of IP laws. (I'm assuming you're in the USA) There are at least two large- scale contract manufacturers in Northern Florida. You could probably get most anything made in any quantity big or small in Hialeah. I assume other states have similar pockets of entrepeneurism.





Mike Halloran
Pembroke Pines, FL, USA

 

[KENAT]

Star for Mike he makes 2 really good points. From what I understand the experience with China is not unique!

 

[zcp]

Finding a local consulting firm to supplement your workforce could prove least costly and provide the most long term benefits. Least costly due to no language barriers and less schedule slip (the key). More beneficial due to getting outside opinions and capabilities and having someone else promoting what you do. Build a long term relationship with them and you will both grow.

ZCP

http://www.phoenix-engineer.com

 

[veryinterested]

Thank you to all for your valuable and appreciated input. I'm a firm believer of never rushing into anything and personal reference being key.

Alex Palm
Bozeman MT

 

[ajack1]

We have customers that outsource to some of the countries that seem to get bad press and I have seen everything from exceptionally high quality to unbelievably bad.

The only two things that seem constant are they will be considerably cheaper and there will be more problems dealing with them.

Whilst cost is always a factor in business how price sensitive are your products? Walk into Joes Autos and you can demand and get a discount, walk into a Ferrari dealership and they will laugh in your face.

If you get it right you can still get a top quality product at a much-reduced price, get it wrong and you could end up with a load of junk impounded at the docks whilst fighting over some legal technicality.

Personally unless I knew someone who dealt with a specific company and were happy with them I would not go down that road, but when you look at the number of major manufacturers that do………

Good luck whichever way you decide to go.

 

[plasgears]

In response to Ford's 'annual 10% reduction in price,' our supplier went to China for acetal material. Either it was 100% regrind, inferior stocks, or whatever, we ended up with a lost contract for infant mortality on a premium auto line. I kept waving the red flag for months. All the key players lost their jobs. And the company lost face in the marketplace. So much for QS9000 certification.

 

[csd72]

If you outsource drafting only, the workload on your existing engineers will increase due to the increased information/checking required by the third party.

If you outsource engineering, then the workload of the senior engineers/management will increase due to a similar factor.

If, when it is outsourced, your company has the available resource to take on these additional quality control/project management tasks then it might work. If not...refer to the doom and gloom above.

 

[HDS]

csd72

good point. Is engineering the constraint or will veryinterested be paying extra to get designs done that can't be made?

 

[foxbat1979]

We prefer to outsource our engineering to two local contractors we use every now and then. The benefits are that they get to know our products and requirements.

We outsourced the engineering and the drafting, but we closely supervise both. Even though it takes up a considerable amount of time, we generally get through these "outsourced" projects without too many hickups. The key thing to minimizing the amount of time you have to put in yourself is that you keep a REAL close eye on the work being done, because it saves you time when correcting his mistakes.

It's not uncommon for us to even take that specific contractor with us to the customer for meetings and so on.

Solidworks 2006/DBWorks 2006 user

 

[Ashereng]

"Niche market scientific instruments."

I am not sure what these are, but if they have any proprietary information, engineering, etc, then outsourcing may not be a good idea. They may get stolen.

Yes, there are copy right laws, patents, etc. They don't work. The only way to keep something a secret is to make sure no one else knows it.

So, if it is your core competency, you keep it.

If you want to outsource, outsource the peripheral stuff. In my industry, that would be things like:
- the travel department (use a chain travel agency and Amex)
- company cars (get rid of them and use Hertz)
- IT for general office use and servers (lots of choices to outsource to)
- accounting (use a large local firm)
- supplies and office equipment (Staples)

Just some ideas.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
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