In today's turbulent global economy, manufacturers seeking the refuge of offshore markets to trim labor costs are severely underestimating the requirements for the ongoing management of their outsourced processes. Anyone who doubts this assertion need only look as far as the 2007 headlines about Mattel and other U.S. companies that were bitten by defects in products outsourced to China and other "low-cost" countries.
"Manufacturers need to understand that their work is just beginning at the time the outsourcing contract is signed," says Vinay Gupta, founder and CEO of Ann Arbor, Mich.-based Janeeva, a provider of outsourcing relationship management (ORM) software. "Outsourcing, by its very nature, breaks the management infrastructure--no more 'managing by walking around'--and outsourcing breaks the IT infrastructure as companies are not able to rely on a captive enterprise environment and on-premise software tools."
Outsourcing is a complex business relationship, one that can't be fully automated. And while no one claims that technology is a panacea for fixing all of the problems associated with outsourcing, manufacturers can benefit greatly from the strategic deployment of technologies designed specifically for managing outsourced processes. Conversely, those that fail to properly automate may continue to suffer debilitating setbacks.
Source: Managing Automation, http://www.managingautomation.com