Thursday, January 15, 2009

Make the Most of Outsourcing Partnerships

Outsource partnerships exist in just about every sector of the global economy, but a substantial portion of the outsourcing industry is electronic and electrical manufacturing. With economic worries stifling growth, outsourcing is a useful way to add resources without increasing staff, training, facility, and other costs. Contractors, outsourcing partners, and design-and-build partners can fill niches across the board. How do you end up with a successful outsourcing partnership for both the IP owner and the contract/outsource affiliate? John Bourneuf and Wayne LeBlanc of Belcan Engineering Group discuss the right ways to outsource, partner with OEMs and designers, and define supplier/manufacturer relationships.

Bourneuf, GM of Belcan's operations in Lynn, Mass.; and LeBlanc, business development manager for the Special Equipment Engineering Division (SEED) in Solon, Ohio, presented the SMTA Boston Chapter with "Successful Partnering With an Advanced Engineering Resource Company — To Complete Advanced Technology Projects On-time and Within Budget." They stress shared governance and buy-in for a project from both the contracted team and the intellectual property (IP) holder. For example, an EMS provider taking on a high-reliability power electronic assembly project with box build must have the knowledge, skills, workforce, and communication infrastructure to interact with the power supply OEM about design, project budget, certification/product test, etc. This reminded me of our EMS Trends panel at IPC Midwest, where we heard advice on the EMS/OEM relationship. Established metrics to track a project are essential for both parties, Bourneuf stressed. Other aspects — IP security, cost analysis, locations — should be discussed before the project starts, not as they potentially disrupt the manufacturing flow.

We've seen some high-profile outsourcing disasters in the EMS market, particularly involving high-reliability/high-security assemblies, such as those for medical or military products. To prevent disaster and to profit, protect IP. "Safeguarding information is the lifeblood of successful outsourcing," Bourneuf noted.

Customers must also be confident in your knowledge and expertise in the niche they are handing over to you. Knowledge gained in one project can apply to another challenge, provided that this isn't spread from one company to their competitor, advised LeBlanc. Another aspect to consider is risk — high-pressure prototyping work, tight cost margins, and lucrative but not guaranteed contracts are just a few examples of the risk inherent in most products. Recently, TFI began promoting a partnership concept called "success sharing" that divvies up risk and profits with a new perspective.

Bourneuf and LeBlanc concluded their talk with several examples of outsourcing partnerships, from complete design-through-build, to manufacturing one aspect of a system, to redesigning and adding onto an existing assembly. If it exists, it potentially can be outsourced. If you're considering outsourcing projects, determine what your core competencies are and partner with strong companies to fill gaps in other areas. If you take on contracts from IP holders, clarify your strengths so your offering is more than just services. You fill a niche to make that company stronger.

Meredith Courtemanche, managing editor

Bourneuf and LeBlanc may be contacted at

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