Conclusions: Current Trends in Production Labor Sourcing
Published on: Jun, 01, 2006
One element from our research is clear. In the modern era of global competition, the companies that will succeed and continue to lead will be those that have a strong vision for lean manufacturing within the context of a dynamic and integrated supply chain. The core element that defines the winners from the losers will be an ability to leverage the expertise and knowledge of workers within your four walls, and establish collaborative results with external parties that can support your area of focus. Many companies have already depleted other opportunities for cost reduction and value improvement through material cost leveraging, headcount reduction, and process mapping. Most, however, have forgotten to include low/semi-skilled labor as an opportunity to drive out waste.
Production labor outsourcing remains as one of the last, but also the most critical opportunities to achieving lean capabilities. Without a commitment to focus on value-added activities and elimination of waste, managers will spend too much time “spinning their wheels” and will be unable to focus on those things they need to work on to be successful. To gain a competitive advantage, leadership teams will need to actively engage production labor outsourcing as a competitive weapon in their arsenal. Production outsourcing is NOT simply a way to reduce headcount or reduce cost; it is a way of improving economic value and total cost, when other options have been depleted.
To initiate this effort, leaders should engage with outsourcing providers such as GCA Production Services to initiate a formal study to identify opportunities. Companies should begin by assessing potential suppliers for their experience, track record, and knowledge in lean principles, as well as prior experience in cost savings and reduction. A careful analysis of these elements and a careful planned approach to deployment with the right mix of positions is necessary to obtain optimum results. Production services companies should be evaluated not just on unit price savings, but on the management capabilities to take out waste and improve the economic value of the entire manufacturing site. Our results show that costs savings of 20-40% are possible over the life of a project improvement effort. This is an opportunity that remains relatively untapped, and which executives should consider closely as a means for not just survival, but for success.
Read the Supply Chain Management Professional Newsletter
Read the latest supply chain research, articles, and news as soon as we post them.