Insight: Strategic outsourcing – the 50/50 principle will put you at ease

For machine builders and OEMs, finding an outsourcing partner that can quickly build a sense of security and make outsourcing trouble-free is essential. Richard Spears from PP Control & Automation shares insight into the measures it takes to be a strategic manufacturing outsourcing partner to many of the most successful and respected machine builders worldwide.

The “50/50 principle” is a way to ensure every decision-maker and stakeholder is looked after and heard throughout the process. It splits 10 key points equally into two parts:

50% of the process builds the right environment to enter a partnership, and the other 50% builds trust in the partner’s competency and the final decision to outsource.

The right environment

Firstly, an outsourcing partner should understand specific business pains and personal apprehensions, and there are generally five specific ways to build the right environment to do just this.

1 – Clear and open communication

When people feel heard and understood, it helps create a sense of ease and comfort. Providing clear information, actively listening, and encouraging open dialogue are the approaches that a responsible outsourcing partner takes to foster a positive relationship.

At PP C&A, those considering outsourcing have direct access to leaders in every department and the relevant individuals at board level. The first task is to understand the specific business pains through consultation with outsourcing experts across sales, engineering, and supply chain teams. This open communication directly influences the advice and recommendations received and is the starting point for understanding whether the timing to outsource is right or if there are other measures that can be taken before committing. Building rapport, showing genuine interest, and fostering a friendly atmosphere is the first step.

2 – Trust & reliability

Building trust is crucial for putting people at ease. Consistently following through on commitments, being dependable, and maintaining confidentiality, or illustrating expertise can enhance trustworthiness. Safe to say, PP C&A will ensure clear policies and agreements are in place to protect the machine builder or OEM’s proprietary information, designs, and technologies, at the initial stage of discussion and throughout the relationship.

The team also lean on an abundance of case studies to illustrate how strategic partnerships succeed. These existing strategies are testament to the reliability required to make decisions on outsourcing in confidence. Furthermore, PP C&A’s award-winning facility is always open to those interested in outsourcing or the engineering and production capabilities offered. Demonstrating competence and expertise tends to instil confidence and when people trust your abilities, they tend to feel more at ease.

3 – Clear expectations & boundaries

Setting clear expectations and boundaries helps establish a structured and predictable environment, which can alleviate uncertainty. There are several ways an outsourcing partner can establish expectations and boundaries before a machine builder or OEM commits to outsourcing. From defining the project scope and requirements, discussing communication protocols, milestones and deadlines, to full clarity on the roles and responsibilities for both parties, addressing IP protection, and providing a service-level agreement (SLA).

An SLA outlines the service commitments, performance metrics, and service level targets expected from the outsourcing partner. This agreement can serve as a benchmark for evaluating performance and setting clear expectations regarding service quality. This will lead to a schedule of regular progress reviews before and during the agreement.

4 – Personal autonomy

Allowing individuals to have a sense of control and autonomy over their decisions and actions can promote ease and reduce anxiety. Empowering people to make choices and respecting their autonomy can enhance their comfort levels. This is something that the team is well accustomed to. The act of “letting go” is often challenging for machine builders and OEMs to face as they embark on an outsourcing partnership. But the right partner should fill you with confidence. You’ll realise quite quickly that letting go means gaining more.

The decision though isn’t one taken lightly and nor should it be. You won’t want to ‘let go’ of anything without doing proper due diligence on your prospective outsourcing partner. And some things are non-negotiable. PP C&A recommend at least nine checks to seriously consider: capability, security, size, supply chain skills, experience, approvals, innovation, location, and values & ethics. In truth, letting go isn’t really what’s happening at all. The reality is the start a new and beneficial partnership that respects personal autonomy on both sides, whilst increasing collaborative practices.

5 – Supportive conditions

Creating an environment where individuals feel supported and encouraged can contribute to their ease. Providing assistance, resources, and constructive feedback fosters a sense of security. PP C&A offer comprehensive information about the benefits, risks, and potential outcomes of outsourcing. Educating machine builders and OEMs about the outsourcing process, potential cost savings, access to specialised expertise and networks, and other advantages are all key. Helping machine builders and OEMs make informed decisions by addressing concerns and providing guidance tailored to very specific needs is core to the whole process.

Conducting feasibility assessments by evaluating requirements and risks, offering flexible engagement models, with options such as partial outsourcing, phased implementation or pilot projects, and ensuring a collaborative decision-making process are all important as you build that supportive environment. Transparency is also key, particularly around pricing and cost analysis. PP C&A clearly outline the expected expenses, cost savings, and return on investment (ROI) associated with outsourcing. Machine builders and OEMs should have a clear understanding of the financial implications and benefits of outsourcing to make an informed decision.

The right choice

With the right environment set, the second stage of the process delivers against 5 key measures, helping machine builders or OEMs feel at ease and confident in their decision to outsource.

1 – Comprehensive understanding

At this stage, PP C&A has taken the time to fully understand the machine builder or OEM’s specific requirements, quality standards, and expectations. This always involves conducting thorough discussions and site visits to ensure a detailed comprehension of the project.

2 – Engineering & production experience

PP C&A possess the necessary expertise and experience in machine building and OEM requirements, and will be able to demonstrate a track record of successfully delivering similar projects. From early design concepts, design for manufacture and assembly (DFMA), supply chain design and optimisation, to product standardisation, design approval processes and machine build, test and logistics – a complete end-to-end solution with several core production capabilities gives a high degree of confidence for any requirement.

3 – Agility & risk mitigation

A good outsourcing partner should be flexible and willing to customise their services to align with the machine builder or OEM’s unique needs. This includes accommodating changes, incorporating specific features, and adapting to evolving requirements or market peaks and troughs. PP C&A demonstrate flexible and responsive production, which is key to creating better business agility. The partnership allows for a reduction in financial risk and exposure, especially in markets where demand can change quickly.

Demonstrating proactive risk management strategies is also key. This includes firstly being responsive to identifying the potential risks and then developing robust contingency plans.

4 – Quality control & assurance

Speaking of ‘robust’, PP C&A has vigorous quality control processes in place to ensure that the final product meets or exceeds the machine builder or OEM’s standards. This can involve regular inspections, testing, and adherence to industry regulations and legislation, including UL 508A and NFPA standards. To demonstrate reliability, PP C&A operates a Quality Management System which complies with the requirements of ISO 9001 and an Environmental Management system complying with the requirements of ISO 14001.

5 – Supply chain management

Effective management of the supply chain is crucial for successful outsourcing. PP C&A has established relationships with reliable suppliers, ensuring timely delivery of components and minimising disruptions to the project. PP C&A has decades of experience in supply chain modelling and strategic purchasing techniques, coupled with a comprehensive global network of supply partners – this experience has never been more valuable especially in recent times with Brexit, the pandemic, the Russian invasion in Ukraine, and rocketing transport, energy and raw material costs becoming ingredients to a disruptive cocktail of supply chain pains.

A successful outsourcing partnership can open the door to better optimisation and supply chain robustness and reliance, even with the combined disruption of these seismic events. PP C&A has worked closely with several OEMs to prove exactly this during the most disruptive periods, including re-designed and engineered solutions and introducing alternate technologies to bypass the electronics market constraints.