The folks at Industry Directions have just announced the results of research they have done on electronics companies and the challenges they face when outsourcing. The research was done in collaboration with the Electronics Supply Chain Association (ESCA).

The study finds that one of the biggest challenges electronics OEMs face when they outsource is the loss of visibility. I’ve certainly heard this repeatedly with the OEM’s I’ve talked to. But, more importantly, the loss of visibility translates to a loss of control. And, despite the fact that they have outsourced much or all of their manufacturing, at the end of the day, they are still accountable for results to their shareholders and customers. So, a loss of control creates a major challenge in terms of meeting your objectives.

This issue of visibility was a core theme at the ESCA conference where I spoke in San Jose. One of the points that I made, though, is that visibility alone is not enough. Many people believe that if you just give your people visibility all the problems will be solved. While visibility is certainly a required capability, it alone is not enough. These same front line decision makers need tools to actually drive action from the information that visibility provides. Without tools to collaborate and detail various action alternatives, taking into account a complete understanding of the impact of any action on the key metrics that the company is measuring, you still have people with a lot of information and no clear path to take the right action.

While outsourcing can drive cost savings, it does introduce a lot of operational challenges. Visibility is a key to solving them, but it alone is not enough.

This entry was posted on Thursday, November 17th, 2005 at 4:13 pm and is filed under General News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.