We have all heard it before,... "If it was not for my suppliers we'd be doing great."  Or, "those damn suppliers just can't get it right."   Well, before you go off and blame your suppliers for everything, maybe a quick look in the mirror might be in order. 

All too often organizations outsource their work in an effort to reduce their internal cost structures.  Typically, the urgency for doing so is high, and the resources for managing the process low.  Face it people, at the end of the day you get what you pay for.  Too little effort invested in outsourcing work is a formula for disaster.  Here are a few things to consider when work is being moved.

First, ask why is the work being outsourced?  If the answer is purely a cost issue, then make sure you are looking at the overall cost associated with outsourcing.  All too frequently organizations mistake a price quote with a total cost.  The expenses of supplier selection, qualification, management, and support needs to be added to the mix.  Before you know it the total cost may be more than what you are spending today to internally produce the same product.  Once you have a true understanding of the financial environment, then make sure you have a plan.

Plan each outsourcing project as a business endeavor.  Make sure there is one person who is clearly accountable for the project.  If a team is responsible then you may find that everyone thinks they are responsible when things go well but nobody is responsible with things go bad - one project, one accountable nose.  The plan needs to ensure it has the support of all the functional disciplines needed to make it happen.  It also needs to have funding to ensure success.

Select your supplier wisely.  After all, if they fail then so do you.  Make sure the supplier has the financial capability to sustain production.  The longer lead-time products require more cash for work-in-progress and the last thing you need if for your supplier to go out of business.  Make sure your supplier has experience in the industry you are working.  Compliance violations can bring a program to a screeching halt.  Make sure your supplier has the technical capability, equipment and personnel necessary to sustain capable production.  And, it goes without saying, the quality management system needs to be robust to assure the system and processes.

Knowledge transfer is a big deal, especially if it does not happen.  If you think simply issuing a purchase order and providing drawings is good enough, then you are forcing your supplier to engage in expensive learning all by themselves.  It's the organization's responsibility to ensure that the requirements are flown down in clear and no uncertain terms.  Holding the supplier's hand upfront to ensure they understand the technical and quality requirements will pay huge dividends when it comes to cost, delivery schedule, and quality.  Oh, those internal work instructions you have in your shop, they are not worth much.  Chances are high that your internal processes have not maintained work instructions to par, and sending them to your suppliers may just confuse things.

No verbal commands should ever be tolerated.  A verbal command is when a buyer or engineer tells a supplier to do something on the fly.  Usually there is a promise to follow up with some sort of paperwork.  Just don't do it!  Doing so always results in something going wrong.  Approved change documents might never arrive, product is produced which is nonconforming, and everyone gets pushed to do stupid things because of a pressing schedule.

Ensure the transferred work processes are validated.  Getting the work processes established upfront, and through a good robust validation process will allow many people to sleep at night without worrying about what might happen.  Use a checklist so that nothing is forgotten.  A best-practice is to measure process capability and establish process maps prior to a move, and then again after the move.  However, before the move, make sure you understand the reasons for poor performance so that they are not replicated elsewhere.

Continuous monitoring and support must be a budgeted consideration.  Make sure you have processes in place to continuously monitor supplier performance and that which you are measuring are valuable metrics.  Measuring the wrong metrics will always leave the door open to unwanted surprises.  When help is dictated by measurement indicators, or by supplier request, don't make them wait too long.  The longer you wait to provide help the further away you get from an on-time delivery.  And the pressures of delivery schedules have a funny way of making smart people do those stupid things.

Good and bad supplier performance must be responded to.  Hitting your supplier over the head with the proverbial stick should not be your first response to poor supplier performance.  Though, being a nice guy is not always in your best interest either.  Make sure the root cause is understood.  Use data for true understanding.  Establish plans for real action.  Don't waste too much time in meetings, get the people with the process knowledge to the task of figuring out what's going on - and get on with it.  At the end of the day, if things can't be fixed with tough love, move the work.

Good supplier performance needs to be rewarded as well.  All too often suppliers feel like they are distant from their customers and may not feel the connection to the end-use of the product.  Praise, rewards, and especially more work are always appreciated.  Also, make a point to share with your suppliers how well their product is being operated in the user-base.

There are so many reasons why organizations may outsource work, but make sure you are honest with yourself in your rational for doing so.  Understand the total cost of outsourcing work, make sure you have a plan for execution, ensure there is budgeting that will enable success, ensure there are meaningful measurements which are monitored, and ensure support is timely.  One additional consideration, make sure you recognize what impact the outsourcing will have on your intellectual capital.  It is quite possible that over time you will forget how to produce the outsourced work.  The result is a growing dependence on your supplier and the loss of knowing what good looks like.