I heard an executive at a brand owner speak recently about their business evolving toward an increasingly outsourced business model. They are now utilizing various component suppliers and contract manufacturers (EMS providers) to do the bulk of their manufacturing. When asked about accountability for delivery times and other key supply chain/manufacturing metrics, the person responded “that’s the responsibility of our contract manufacturers. That’s why we outsource, so we don’t need to worry about that.”

That certainly is one reason to outsource, to benefit from specific expertise in meeting these objectives. However, who do you think the customer will hold accountable if they are not seeing your commitments to them being met? Who will the customer call? Who will the customer hold accountable if, when they want to change or drop-in an order at the last minute and you can’t commit to meeting their needs?

While outsourcing has brought tremendous benefits to brand owners, it’s also brought increasing complexity. Brand owners remain accountable for the end result and for meeting (and hopefully beating) the expectations of their customers.

To achieve this, brand owners must be “in the game” and coordinating the activities of their extended supply chain. Increasingly this means that they must be able to effectively respond to change across their supply network. To do so, they must have broad and deep visibility into the supply network since visibility is the foundation of effective Response Management. They also must be able to fully leverage this visibility by putting it into the hands of the people that can make a difference, the people that must be able to respond quickly to change and coordinate effectively with their supply network partners to achieve the desired result.

While brand owners can realize tremendous benefits from outsourcing, they still remain accountable in this new distributed manufacturing environment and must leverage technology, people and processes to ensure they achieve their end goals.

This entry was posted on Thursday, July 13th, 2006 at 10:29 am and is filed under Best practices. 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.