Medical Device Link.

GUIDE TO OUTSOURCING EDITOR'S PAGE

Under pressure to stay ahead of the competition and to innovate with ever-decreasing budgets, you may very well see outsourcing as the key to the future. In a recent survey, manufacturers and other industry experts cited reduced margin pressures, increased return on investment, and faster time to market as three key drivers of outsourcing. The online survey was conducted by the Wharton Business School in Philadelphia and HCL Technologies in October 2007, and a report was issued in February 2008. HCL is an outsourcing firm based in India.

The respondents indicated that they see strong potential in outsourcing or collaborating with outside partners to meet today’s manufacturing challenges. “The picture that emerges from the survey is of an industry struggling with profound changes . . . from the way it is organized, to the way it operates, to whom it serves,” the report says.

Most of the individuals surveyed were optimistic about the capabilities of outsourcing partners. Interestingly, 84% agreed that “an outsourcing partner can appreciate the complexity of your varied supply chain and support you through the consulting and execution alike.”

The challenge is no longer just keeping up with quality levels or finding a vendor with sufficient expertise, though. It is also addressing organizational issues. “You have to treat [outsourcing] much more like an alliance,” notes Saikat Chaudhuri, a professor of management at Wharton. He says the structure of such alliances varies from putting staff on the vendor’s site to using an offshore subsidiary that can work with the vendor.

Regardless of the structure, the report emphasizes that outsourcing partnerships require careful thought about what you hope to accomplish with the relationship. Strong lines of communication are essential in any outsourcing arrangement, and if your outsourcing partner is offshore, it is an even greater challenge that must be addressed at the outset.

The report recommends that device companies set specific goals for the outsourcing initiative, maintain realistic expectations, and align the goals of vendor and client. No matter what your reason for outsourcing, always make sure that you and your vendor have the same expectations. Develop clear specifications, articulate team structures and roles, and most of all, plan ahead.

Sherrie Conroy for The Editors