Tag Archives: outsourcing

Outsourcing and Quality

Photo: W. J. Latzko, Ph.D.
W. J. Latzko, Ph.D.
The recent recalls of products made in China underlines the need for an active program to assure the salability of goods and services when outsourcing. The only reason a company has to outsource the production of items, or the operation of a call center, or the production of a computer program is to reduce costs. Everyone knows that reduced costs increase profits. Or do they?

When outsourcing, one must not forget that the customer is interested in value. Value includes the price and the quality of the product or service. A product or service for which one has paid good money must be able to deliver what the supplier promised. Unfortunately, some use outsourcing to reduce costs without examining whether the quality is the same as that resulting from company employees.

Is the outsourcing supplier consistently delivering useable output that will delight the customer? Note the word “consistently.” The output of a supplier whether foreign or domestic is a process. Processes have variation inherent in their application. If this variation is within supportable limits the process is delivering the desired quality. If the outsourcing supplier delivers quality output at one time and not at others, costs increase. Just ask the folks at Mattel. Their China factories produced defective toys, causing expensive recalls. Not only did it cost out-of-pocket money but reputation as well. In an effort to restore their damaged good name, Matell’s Chairman and CEO has a message on the Internet (go to http://www.mattel.com/safety/us/) trying to restore consumer confidence—read not lose sales.

Unfortunately, many companies that outsource their products and services rely on inspection to maintain quality. In our profession, we know that reliance on inspection without process controls is not 100% effective and, therefore, not safe. Companies that outsource their work, would do well to employ professional people, who understand the issues of quality, and act on their advice. It is cheap insurance. Just ask Mattel.