Outsourcing is a brilliant strategy but there are significant risks.
The path to successfully bringing a product to market can take unexpected turns. There have been a number of interactions with potential clients that are very memorable. All managers know it is rarely a good thing to get a phone call late on a Friday afternoon. It was one customer I will never forget. His outsourcing strategy had failed miserably.
With 95 percent of his budget spent, his prototypes did not work.
A potential client was developing the next generation of Lasik technology. He was having extreme difficulty bringing a prototype to market. He inspected a vast majority of his prototype’s components and found they were fabricated according as expected.
The exception is the optical system. He ordered the prototype’s optics from a Chinese company. He was excited about how low the price was and paid “next to nothing” for them. After trying different combinations, he and his team had identified a specific section of the optical system was the culprit. His budget and schedule were limited. It was clear from our first conversation, his priority was schedule. He needed a working prototype to get venture capital funding.
Time was short and he needed results fast!
He sought our expertise in optical fabrication and quality assurance in order to diagnose and resolve the problem. We accepted his request to inspect his optics and started a standard inspection. Immediately, there appeared to be multiple coating layers in violation of his specifications. To verify if the substrates could be salvaged, two samples were selected and the coating was removed. To our horror and his, we discovered a very poor quality substrate material. We terminated the effort to salvage his optics. He agreed to buy a new set from us.
1. Quick identification and resolution of optical system non-performance without significant impact to project schedule.
2. Our combined efforts led to the successful assembly, testing, and validation of the company’s first prototype and subsequent Venture Capitalist funding.
3. A strategy for scaling up production to 2000+ units a year using domestic suppliers.
4. Coaching on quality assurance and specifications to reduce cost while ensuring quality.
5. Client was provided component drawings with updated specifications and quality assurance requirements.
It was a cost reduction effort that nearly cost him his company.
Do not base your decision to work with a supplier solely on price. Your name is on the product or service. Your customer does not distinguish between you and your suppliers. They expect great service and failing to provide it can cost you your company.
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