Outsourcing stage 3 - Design Tasks 10

[KENAT]

I nearly posted this over in -Engineering Project Management but I’m not sure how much traffic that forum gets so I’ll post it here.

The outsourcing whirlwind is picking up momentum, first it was machining to Asia (which supposedly is saving bug $, though I’m not sure if those are real $ or projected) then drawing checking thread1103-216008 (hasn’t really worked out, yet) now it’s design.

We’ve actually already outsourced some design to companies with specific expertise in specialist areas (not that it went smoothly) but now it looks like they’re looking to do it for some not so specialist tasks.

I’ve been involved with outsourcing engineering tasks on both sides of the fence at a previous employer, though not really on sending out actual design tasks.

My first thoughts are that you need to robustly define the Requirement, not just technical/performance but things like drawing/CAD standards, what software they’ll use etc and project/financial/contract issues, explicit list of deliverables etc.

Second is that you need to actively manage the process, with status tracking, design reviews and the like, not just ship it out and forget about it until it’s due. This probably needs to be by more or less dedicated staff (though they may have more than one project to manage) not a design engineer doing it on the side or even a high level project manager doing it alongside significant management of internal work.

Third is that you need to examine/inspect what you receive to make sure you’re getting what you asked for/specified, this doesn’t just mean a cursory glance by someone not really qualified but quite likely a multi disciplinary design review and/or a detail review by relevant experts as required.

We currently fail to do this well for many internal projects and I’m concerned we’d be worse with outsourcing.

I’m not completely ruling out outsourcing, areas I’ve seen it work is out sourcing to ‘experts’ or for very large organizations outsourcing non-core tasks to smaller nimbler firms. However, these large organizations took the management of these efforts seriously and devoted resource to it. Also we are relatively small (mid sized company but with multiple sites/product lines each semi independent) so you’d hope we’re flexible enough where eliminating the overhead etc doesn’t compensate for the extra management required.

My manager has asked me to give some input on this, so that means you get a chance to have your say too;-) and make me look better (hence Improve Myself to Get Ahead in My Work). Any input appreciated did I miss anything or put anything that’s nonsense. I did a quick search but didn’t find as much as I expected to.

If places like Boeing manage to get it wrong on their premier project, what chance do we stand;-)


KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

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[MikeHalloran]

My friend Joe, in reference to manufacturing, said "Farm out the easy stuff; keep the hard stuff in house." For him, it mostly worked... but he was talking about _making_ widgets, not _designing_ them... which _is_ the hard stuff.

I suspect/ predict/ fear that anything positive you say about outsourcing will be heard much more clearly than the cautions you have already expressed about the need for detailed oversight... and when it all goes sideways, you will be blamed for the whole mess.





Mike Halloran
Pembroke Pines, FL, USA

 

[MadMango]

Are there prototypes included of the design, or just a package of CAD data? Will this end information be transmitted electronically or through couriers? You (your company) could treat this as simple as purchasing a system from a vendor State-side. Your company might not get the end results they were hoping for though. I think you've got the major bases covered above.

You definitely need detailed project/program plans, and make your outsourcing agents meet those deadlines. You will need great communications, and from what you've stated above you don't even that in-house. Notice any rats jumping ship yet?

"Art without engineering is dreaming; Engineering without art is calculating."

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[bvanhiel]

Most consumer products are already designed in China. The only thing that happens in the US is the marketing and styling. Those functions are unlikely to move until the US market for junk dries up (i.e. Monday).

-b

 

[KENAT]

So some additional information.

We don't make consumer products - they are metrology tools/instruments related to nanotechnology.

At present (though this can I'm sure change) they aren't looking to outsource this design abroad. In fact the first place they are looking at is in-state less than a days drive away.

Thanks for input so far.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[ctopher]

At my last company, they built a mfg plant in China.
All of our commercial drawings were sent to them for mfg.
They trained the Chinese workers to build, QA, inspect, etc.
Then they hired a Chinese engineer, trained him how our products are designed, then gave him the freedom to translate the drawings to Chinese, non-US specs, and metric!
Over the past 6 years this has almost killed the company. This year they laid off half of the employees!
They learned that a lot of the products became more expensive to mfg in China, but it's too late.
China now has US technologies and know-how.

IMO, outsourcing is killing the US.
Boeing no longer does mfg, only assy. Almost all of the parts are outsourced to other countries. Now Airbus, China & Russia are going to 'squish' Boeing. No more American made anything...

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[GregLocock]

I reckon that the outsourcer might see a headcount reduction of 50% at best, but the heads you typically lose are the cheapies - the cad grunts. The difficulties associated with supplying engineering type info (eg measured fatigue loads in my case) to another company, and having to explain stuff that is already known in-house, pretty much increase the workload in some areas.

The exception is if the outsourcee is more experienced than the outsourcer in which case the project might run smoothly, if they trust each other.





Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[MintJulep]

To expand on the list in your original post:

As you noted, the design and performance requirements must be robust and quantifiable.

You will need to be able to determine exactly who's stuff isn't working correctly when you start trying to integrate the designs from a hodge-podge of different designers.

Your design contracts need to be iron clad.

To do this right, you need a staff of integration engineers that would probably be as large as the staff of design engineers required in the first place.

It's far easier to do it wrong.

 

[vc66]

KENAT-

If your side does it the way our side does, I will tell you exactly what will happen.

The contract will state something extremely close to, "We don't give a crap what you give us, just make the CAD models look pretty. We'll take it in any way, shape, or form. Really! We don't care. Just give us anything."

And then, when it comes in, "finished", you will be the one to have to change everything that they did wrong. All the while, upper management will think everything went swimmingly, because none of the engineering managers have enough cajones to tell them that outsourcing design was a REALLY stupid move.

That's currently what I'm in the middle of now.

Hence, my comment in Mint's motivation thread.

V

 

[Joshmo]

My two cents being previously a design contract engineer working on outsourced projects is the following:

* You must have the design requirements fully spelled out(Tolerances, materials, ICD's, environments, weight, finishes, pressures, dynamic/random vib, etc...)

* You must require the outsourced company to work in the same software (orphaned .stp models are no bueno)

* Time and materials contracts are to the contractors benefit not yours (FF contracts make them bid responsibly)

* Contractors working on sight are preffered to one's located oversea's (can oversee their work better)

 

[KENAT]

VC66, that's kind of what happened with our outsourcing to 'specialists/experts'. I'm hoping, though not optimistic, we can either shoot this down or at least get a framework in place to reduce the inevitable pain.

Apparantly our site/division exec VP, did it at previous employer and him & my VP thinks it's a good idea to do here. Director of Engineering isn't so sure and my Boss is highly sceptical, having got his fingers burnt at a previous employer.

As Greg & Mint have alluded to, my concern is that to do this properly we'll substitute say 10 staff of varying experience levels (designers, interns, junior & mid level engineers) for 5 or probably more Systems/Integration/Project Engineers of on average higher 'cost'.

I think they are looking at this primarily as a way of getting more work done without increasing staff (possibly decreasing staff). Now we are not that good at detail design of non core technology (I swear no one here had heard of tolerance before my boss started here) so the idea of getting better quality work done externally does have some appeal. I'm just sure they wont want to put in the management effort to make it work, and given that cost is the major driver we may be getting cheap not necessarily good work done externally.

Thanks everyone.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[JStephen]

At a former employer "engineering" or "design" was synonomous with "making drawings". When you think like that, then yeah, any crap that comes in the door is fine, as long as the paper is covered with lines and text. And of course, doing a better analysis is a bad thing, because it then takes too long to put the lines on the paper.

You might ask them if they have considered outsourcing the management, as it can be done cheaper overseas as well.

 

[MechEng2005]

I don't see the benefit for your company. If the work is being outsourced within reasonable driving distance, the economy there can't be much different. The only benefit would be if it were being outsourced to a company with lower wages/benefits, in which case it may be cheaper to outsource it. However, I suspect that you will get what you pay for. If the employees at the outsourced firm were as qualified as your current designers, why don't they move for better wages/benefits? Maybe the economy down the road is better (ie if it's out of a major city, lower cost of living, so lower wages). Maybe the firm that you would outsource to is just good at picking up good technical people that have trouble getting a better position (I suspect there are a number of good designers out there that have been down-sized for reasons other than the quality of their work).

I would still advise caution, as I personally find that you DO get what you pay for, and 85% of the time that you try to find an exception, it will come back to bite you...

-- MechEng2005

 

[KENAT]

"I don't see the benefit for your company" - it was the exec VPs idea, need I say more?

The place they're looking at isn't just down the road, it's a fair distance, maybe 4-5 hours drive+. Although it probably has similar cost of living to our location. We're in Santa Barbara, they are somewhere in the Bay area.

The one thing I can think of is that I think the first package they are looking at is packaging of electronics in enclosures, both 19" rack and similar size desktop. If this shop is an expert in electronics packaging it may have merit but I'm still inclined to think it's more hassle than it's worth.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[Tobin1]

Howdy,

Interesting thread. Anybody read "The World is Flat" by Thomas L. Friedman? It contains a very interesting history of Outsourcing related to a bunch of different industries. It certainly seems that this concept will not soon go away. From what I can see the best thing to do is - learn how to manage it well. There has been some good suggestions here. Just wanted to put my two-cents in .


Tobin Sparks

http://www.nov.com

 

[IRstuff]

While there's a bit of spotlight on Boeing, earlier, w.r.t. outsourcing, this is neither a new trend, nor is it strictly outsourced to foreign suppliers. The Big 3, Boeing, Raytheon, Lockheed Martin, Northrop, have all been doing some level of outsourcing or "System of systems" procurements for quite some time.

AC Delco is an example of domestic outsourcing, although it did start off as a captive supplier. In aerospace/defense, there are dozens of 2nd and 3rd tier suppliers that are outsourced to by the big defense contractors. At one company, we were working on some nifty systems, but our BD guy snorted and said, "We are not a component company," to mean that our company was not going to waste its marketing muscle to peddle a $300K system when the same guyg could be peddling a $300M system. Even my current company, which is a 2nd tier supplier, outsources smaller subsystems to 3rd tier suppliers

This is the nature of human history and development. There was a time when every adult person alive knew how to grow his own food, build his own house, and make his own clothing and tools, etc. Even 20 years ago, the average teenager could strip and rebuild a carburetor.

So, we, as individuals, are also outsourcing our needs to the grocer, the gardener, the oil change shop, the clothing store, etc. When that happens, we lose direct control over the quality.

Anyway, outsourcing, to domestic or foreign suppliers, is not going away, simply because the leveraging of smaller systems into larger systems is where the bigger profits go. The lowest tier supplier is always squeezed for cost savings.

Unfortunately, there are an infinite number of paths to failure, and relatively few paths to success. Nonetheless, there are some things to do:
> Clear, quantifiable, and measurable requirements. Minimize the motherhood requirements.

> A System Requirements Review to ensure that the supplier understands the requirements to be the SAME requirements as you do. Often, what looks like a solid requirement to the writer looks like Swiss cheese to the supplier.

> A detailed Integrated Master Schedule and Plan. Look for reasonable time spans allocated to the work required.

> Earned value tracking. Frequent status reports that go beyond, "Everything's fine, don't worry."

> Design reviews, preliminary and critical. Look for tolerancing, margin analysis

> A solid verification plan and procedure. Everything that was specified should be tested to verify compliance to the requirements

> A solid product readiness review. How are they going to handle the production volume? Do they have the facilities, equipment, material suppliers, and labor force? Is their production plan realistic?

TTFN

FAQ731-376

 

[KENAT]

IRstuff, that's the kind of 'outsourcing' I was involved with in a previous life working in defence/aerospace.

This largely falls under my "large organizations outsourcing non-core tasks to smaller nimbler firms" category for the most part, with some of the 'outsourcing to experts' thrown in. These were the places that took it seriously and devoted a fair amount of effort to managing it.

My concern is that my employer will just want to put together a very vague requirement, perhaps competatively tender it but likely sole source it, place the PO then forget about it till it's due.

Anyway, thanks for reminding me how it's done and thanks to others too.

(How the heck did I get a star when I'm the one asking the question?)

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[ajack1]

Well speaking from the other side as someone who owns a contract design company obviously I do not agree with a lot of the views above. Contracting out work can be very beneficial, if done correctly.

I pretty much agree with everything IRstuff says but would also add that finding a company you wish to work with over a period of time is paramount. Relationships need building and there are always going to be problems along the way, think of it as developing a product, there are nearly always tweaks that need making to get the finished product you require.

The two things that would concern me most are Kenats comments

“We currently fail to do this well for many internal projects and I'm concerned we'd be worse with outsourcing.”

“"I don't see the benefit for your company" - it was the exec VPs idea, need I say more?”

Firstly yes if you cannot put the procedures in place and supply the information to make things work internally, you can bet your bottom dollar things will be worse if you outsource. But that is an internal failing not a problem with outsourcing.

Secondly going back to my rugby playing days, I cannot remember winning many games I did not believe we would win, that does not however mean that we did not lose games I thought we would win, but if you believe something will fail you can be sure it will.

Design companies need happy customers, that is how we pay next months bills and wages, the happiest in my experience are the ones that work closest with you.

 

[GregLocock]

Ah, by outsourcing I assumed Kenat meant overseas.

The auto industry outsources all the time, and has ever since I started work. For example there are several consultancies who will take on an engine redesign project, or noise reduction, or whatever. Almost all those pretty showcars that the fanboys love are outsourced. Even some manufacturing jobs are outsourced - Steyr Puch builds all sorts of cars and trucks, for instance.

Yes, your own engineers become project managers/system integrators/spec writers. Your contract lawyers become an important part of the team. Your CAD guys become experts at translation and database management.



Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[drawoh]

KENAT,

The one thing I can think of is that I think the first package they are looking at is packaging of electronics in enclosures, both 19" rack and similar size desktop. If this shop is an expert in electronics packaging it may have merit but I'm still inclined to think it's more hassle than it's worth.

I have designed a lot of electronics packages, like 19"[ ]rack mounted boxes. Are your electronics people together enough to finalize all their information, in sufficient time for the subcontractor to take on the job, follow rigourous design procedures, and send drawings out to desireable (i.e. busy) fabricators?

I have spent a lot of time working with electronics hackers who want nothing more than to get parts in house as quickly as possible. Then, they can attach their stuff, drill holes, file things down, and take stuff to the machine shop for modification. Eventually, they get it working. It is too bad if you are the schmuck who has to manufacture it, because you don't have mechanical assembly drawings, often don't have cable drawings, and you probably cannot reproduce the phone calls that went out to the machine shop to get things modified.

The advantage of a subcontractor is that you can discuss the a**hole who f***ed up the drawings loudly and explictly, anywhere in the office. The subcontractor won't be around to overhear any of it. It is quite possible, they were competent, and tried very hard to do the job properly, but were unable to collect the information they needed.

Good electro-mechanical, or opto-mechanical, or opto-electro-mechanical design requires a lot of communication. Sending part of it out of house is a good failure strategy.

I can see a good case for subcontracting where you have a system or module that requires specific expertise that you do not have and do not want to develop, in house. You can define a simple interface, like a 9U 19"[ ]rack box, and a few connectors, and some DC[ ]voltage and current. Then, you can let the experts do it.

JHG