Outsourcing Manufacturing Process

Shabeerali
shab-pg5@iiitmk.ac.in
In January 2002, IBM outsourced manufacturing of its
NetVista
desktop computers to Sanmina-SCI as part of a broader strategy
to reduce both fixed and variable costs.

Allowed IBM to focus more of their own investments on areas

that deliver the highest value to their customers.
In 2000 Microsoft added game consoles to its product mix with
the Xbox.

Microsoft hired Flextronics to introduce the product

and ramp up manufacturing to meet global demand.

Ultimately,the Microsoft-Xbox product was built in

Flextronics's existing manufacturing facilities around the
world.
 Core Process Management Roadmap

Understand Customer Strategic Objectives

Requirements

Measure Current
Performance SWOT Analysis

Identify
Processess Specific Goal & Objectives

Identify &
Priortize Projects

Develop & Implement

Improvement Plan
 Direct benefits include:

• Focus on core competency

• Reduction in manufacturing costs through the consolidation of
operations and reduction of inventory carrying and transportation
costs
• Reduction in management
• Improved accuracy through better inventory visibility and production
tracking
• Flexibility and wider range of service.
 Indirect benefits

• Creating a catalyst for change by highlighting how outsourced operations are

managed
• Initiating or fuelling expansion by allowing a company to offer new services
because outsourcing has improved performance
• Stimulating analysis due to the requirement to document business
processes and their costs
• Converting sluggish functional areas into dynamic, successful one
• Developing resources and contacts brought to the table by
the service provider
 Reference

1. “Defense & Aerospace ElectronicsManufacturing

Outsourcing – Realities &Trends” by
Jeff Kaylor, Sypris Electronics, LLC, Tampa, Florida, USAS

2. “Logistics and Manufacturing Outsourcing: Harness Your Core Competencies” by

James A. Tompkins, Ph.D.,
Steven W. Simonson,
Bruce W. Tompkins and Brian E. Upchurch

3. “Strategic Outsourcing: Electronics Manufacturing Transformation in

Changing Business Climates” by
Al Delattre, Tom Hess and Ken Chieh