Keys to Successful Outsourcing

You´ve made up your mind. You are hiring a Contract Manufacturing broker to take care of your outsourcing needs in Mexico.

How can you make sure that the outsourcing endeavor will be successful?

Well, there are sides to this equation:

• Buyer´s side (the company requiring the Contract Manufacturing)
• Broker´s side (the outsourcing agent, who will be responsible for the Contract Manufacturing in Mexico)
• The relationship between the two

The probabilities of success increase significantly when each of these sides minds some fundamental principles.

The Buyer

Commitment. The highest ranking executives in the company must be fully on board with the idea of outsourcing. They should get involved from beginning and demand frequent updates.

Clear goals and objectives. The company should fully understand the scope of the agent´s services and what he or she can and cannot ask the suppliers to do.

Trust. The ought to be confident that the outsourcing broker is providing the best suppliers for your needs. A knowledgeable agent will not aim for the cheapest supplier if he knows the choice will be more expensive for your company in the long run.

Partnership mindset. The outsourcing broker is more than a service provider. He or she is your partner and will be looking out for your interests. Treat the outsourcing agent with the same courtesy as you would an in-house employee.

Set realistic goals. Would a factory in the U.S. be able to fulfill an order without previous notice? Would you be able to get raw materials overnight in the U.S.? If that does not happen in the U.S., chances are it does not happen in Mexico either. So talk to the agent to set-up a realistic time frame and budget.

Assign a contact person. A representative of the American company must be assigned to communicate with the outsourcing agent and coordinate talks with other team members, receive updates and keep track of goal completion.

The Contract Manufacturing Agent

Reputation. A reputable agent attracts high-quality suppliers, and can provide a better range of options for his or her clients.

Reliability. Agents who consistently deliver results and fulfill their commitments are rewarded with their customer´s trust. This eventually allows the client to relax and concentrate on his core business, knowing the outsourcing is in good hands.

Role definition. The lack of clearly defined roles and responsibilities was mentioned in a study by Portsmouth´s University as the most frequent reason for the failure of an outsourcing relationship.

Constant enhancement. The Contract Manufacturer is committed to improve its practices after each production cycle.

Customer service. The agent´s goal is to provide a solution for the American company looking to decrease production costs, not to become another problem.

Understanding the client. The agent should be familiar not only with Mexico and its assembly practices but with the needs, goals, and values of the American company.

Experience. The agent must have the skills and experience to make things happen in Mexico, and to communicate in a seamless way with the American company while complying with their standards.

Reputation. A reputable agent attracts high-quality suppliers, and thus, can provide a better range of options for his or her clients.

The Relationship Between American Company and Outsourcing Broker

Good rapport. The American company should consider if the outsourcing agency seems like a good fit regarding work ethics and company culture. Make an effort to meet in person and even visit the factories and workshops in Mexico. Ask the agent questions, listen to their vision and values, require recommendations from other customers.

Continuous improvement. Even if an agency is running your Contract Manufacturing in Mexico, it is important to keep updated on their arrangements and progress. Ask your agent to keep looking for ways to improve the operation and decrease costs.

Open communication. Communication between buyer and is vital. The American company must clearly communicate its goals and concerns, and the agent must be willing to discuss any operational problems openly. Setting a well-managed relationship is probably the most important step to succeeding when manufacturing abroad.