Out-source manufacturing is a de-facto matter of business necessity for most OEM and ODM manufacturing companies. It is estimated that in 2008 (source IDC) that the assembly value of the global electronics market was close to $1 trillion dollars, with roughly $300 billion being outsourced. With this rising share of outsourced manufacturing, the cost saving benefits are well known and proven.  What is unknown and still a struggle to solve is the state of the product’s quality when shipped to the customer.

I believe the fundamental part of this problem is how to strike the right balance of trust between the OEM and outsource manufacturer to achieve the desired quality.

Here are some interesting excerpts  taken from a study done in 2006 by Venture Outsource:

Comments from OEMs that were asked what outsource manufacturing companies could do to improve overall trust:

• “Be accountable and be able to share real-time data.”

Comments from outsource manufacturers on what they should be improving:

• “Improve overall performance, including quality and delivery lead-time.”
• “Increase transparency while at the same time indicating that the company must be a profit-seeking enterprise if it is to serve its customers’ long-term best interests.”

My takeaways from this study is that visibility of quality data both historically and in real-time are key enablers for bridging this trust gap. With the right level of information sharing, trust can be built and ultimately allow the relationship to be stronger.

Sincerely,

Harsh Wanigaratne

VP Marketing, IntraStage Inc.