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Accountability in Outsourcing and
Offshoring
By Craig Bailey
During a recent visit to a new client, the topic of outsourcing/offshoring
a segment of their manufacturing operations came up. Outsourcing, of
course, can be a viable option to reduce costs as well as ensure that
your precious internal resources remain focused on core competencies.
Too often, however, people forget that outsourcing isn't an escape from
accountability to product and service quality. While they may
intellectually know this, the actual methods for "maintaining" that
accountability are often lacking. Consider the following scenarios.
In the recent past, it was discovered that toys manufactured in China
contained lead paint. US-based manufacturers have long since known of
the toxic nature of lead and it has been eliminated as an ingredient to
virtually all products. So, how did this happen?
Well, the responsibility of "who does what" for the manufacturing of
toys was handed to a Chinese firm or firms. The toys were subsequently
manufactured (at what you'd imagine to be a significantly lower price
than "onshore") and shipped around the world only to be discovered "too
late" that the toxic toys were in the hands (and mouths) of children.
Who is accountable? I assume that you would agree that it is the toy
companies that did the off-shoring of their manufacturing operations.
And, it cost them…
More recently, the phenomena of "Chinese sheetrock" has emerged as what
may be the next radon and toxic mold scare. If you haven't read about
it, check out this
online summary article. You can learn more by googling "Chinese
Drywall." Same question: Who is accountable? My opinion is that the
companies who acquired the tainted materials from the Chinese
manufacturing firms are solely accountable and I'm sure that this will
soon be worked out with the legal proceedings that are underway.
The moral of the story is that when we get caught up in the frenzy of
lowering costs by outsourcing / offshoring (transferring the
responsibility for "who does what") we must not lose sight of the
importance of our accountability to the outcome (what is done). When we
fail to recognize this, it can ultimately cost significantly more to
recover than the savings that we initially reaped from the offshore
arrangement.
In a nutshell, while firms are looking at every possible way to cut
costs, assigning responsibility for manufacturing or service delivery to
an outsourcer (on or offshore) doest NOT relinquish you from the
ACCOUNTABILITY for the results or outcomes of what they ultimately
deliver to you and your customer. You need to be just as involved, if
not more so, in the overall inspection of quality and performance of
these firms as you are with your own internal resources.
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