Outsourcing: Other Intangibles

1) Check references and ask current customers if they are happy with this CM’s performance. Ask them as many questions as you can about projects, costs, deliveries etc.

2) When selecting your outsource provider, narrow choices down to top 3 or 4 candidates. This allows for a thorough review by your team. Use the Supplier Evaluation Form as one way to help narrow down choices without expending a lot of resources. View Supplier Evaluation Form

3) Consider CMs that can cater to your startup size that can bring in additional resources as needed and has capabilities to go offshore. Financial considerations will dictate if this is viable from the CM perspective. You may have to start with a small local outsource provider and move up later to a larger more capable CM.

4) Earn the trust and respect of your CM so you can have the ability to move freely about the area where your product is being manufactured without the need for an escort.

5) Try not to release any kit builds with a significant amount of shortages. This will only add delay and could cause confusion if parts just dribble in to the CM. What I have done in the past is have the CM build short of parts so that I can have units back sooner (I do this because I had personnel at my facility install the missing parts when they arrived and some circuitry can be tested without a fully populated unit). Building short of parts usually requires written authorization for CM to start the assembly process and a modified BOM will be required in most cases. Having a modified BOM protects the CM in case of error and it is typically required per their ISO process.

6) If the CM has the ability, have them start to focus on areas for improvement such as DFM (design for manufacturability), DFT (design for testability) and FMEA (failure mode effects analysis). It is never too early to start these evaluation processes even when building prototypes. I would strongly encourage finding a CM that has some technical capabilities in this area and test them to see if they can help you improve your designs.

7) Key members you should insist to be on your team from the CM side are as follows:

• Program Manager
• Purchasing
• Inventory/Production control
• Quality Engineer
• Manufacturing/Test Engineer
• General Manager or Director of Operations

Get all contact information from everyone including cell phone numbers from both sides and publish this list. Set up an escalation path on both contact lists so that each team member knows who to contact in case the primary or even secondary contacts are unavailable. Return to Outsourcing