Lack of capacity, along with rising operating costs and increased competitive pressures, have caused companies to explore the option of contract manufacturing for their products. Contract manufacturing outsources certain manufacturing operations to a third-party, passing on the responsibility for materials, capital, equipment, staff, and software.
Imagine notifying your two largest customers that their lines will be down because you won’t be able to deliver their products for 16 weeks. Imagine the daily conference calls, site visits, audits, and over-time costs while your organization is turned upside down trying to deliver product, all for one simple reason: a key part of the process was never formally documented on an assembly that is newly outsourced, or outsourced from a new supplier.
In cable assemblies and wire harnesses, there are hundreds and often thousands of opportunities for defects per assembly. Therefore, it is imperative that a manufacturer takes rigorous steps to mitigate the risk of incurring those defects. Multiple process controls must be deployed to ensure that a wire assembly is produced that meets or exceeds the customer’s requirements. Many of these measures are taken before the components are even built. Revision-controlled quality requirements---specified on prints and in workmanship standards---must be understood. Operators must be trained and must demonstrate this understanding. As an assembly is produced, a predetermined regimen of tests and other validations are employed, both by operators and technicians. These validations, depending on the project, can include mechanical, electrical, and environmental tests. Each of these stages in the quality assurance process ultimately ensures that the product meets or exceeds the customer specifications.
Twenty-five years ago, Liberty Electronics’ system for creating and distributing work instructions was 100% paper-based. At Liberty, as with most companies in the industry at that time, engineers created work instructions for each assembly, printed out each document, and distributed them to manufacturing personnel. These manufacturing employees, in turn, depended on these paper documents in order to assemble components according to contract. Upon completion of an order, the documents often had to be filed for reuse at a later time.
In developing standardized procurement processes, operations and purchasing decision-makers should consider strategic sourcing as a part of their procurement best practices. However, they should keep in mind that strategic sourcing is not a single project but rather a key continuous process.
For those companies sincere about establishing control over their supply chains, incorporating strategic sourcing principles should be evaluated. Decision makers must ask: Do we control our supply chain, or does our supply chain control us?
Understanding Turnkey Manufacturing
Turnkey manufacturing solutions are a common outsourcing practice. The term refers to outsourcing production to a single manufacturing partner who controls the process from beginning to end. Companies choose this model because it eliminates the hassle of managing relationships with multiple vendors, making it is as simple as “turning a key” to complete a project.