Came across this interesting article from Tam Harbert writing for EBN - "Is Outsourcing Losing Its Appeal" Her thesis is basically that if companies like Google and Lenovo are looking at building their own products again, then maybe other large OEM's are looking into building their own products as well. It's well written and worth the read.
Obviously, WAi has a vested interest in companies outsources their manufacturing. I thought this might be a good opportunity to explain why we think outsourcing can be a good idea for many companies.
Primarily, it affords the company greater flexibility. They no longer have to concern themselves with questions like "Do we have enough employees to build as many products as we need?" or "Do we have too many employees and not enough sales to sustain them?". Not to mention the fact that since they build only their own products, they might not be exposed to greater manufacturing challenges that might push their skills to a higher level. Or, for many of our customers, they simply cannot afford the hundreds of thousands of dollars worth of equipment that would assemble the advanced circuitry that their engineers want to build.
When people think of outsourcing production, they often think of dirty, dark sweatshops in Asia where children slave away, tied to workbenches and rationed crumbs of bread to sustain them. This is not what outsourcing is like. Especially considering a lot of outsourcing is outsourced to domestic manufacturers like us. Outsourcing should be viewed more like a coop farm. In a coop farm, the farmer has more land and grows more food than he and his family can eat themselves. He really enjoys the farming process and taking care of his fields. He takes great pride in watching his crops grow and even greater pride knowing he's doing it without pesticides and artificial fertilizers. But then there's that pesky problem of too much food. So what does he do? He invites his neighbors to buy his extra food. Now his neighbors get to enjoy all of the benefits of fresh organic food, without all of the effort. They know the farmer well, they trust him and are happy to support him. They make requests of specific food items and this invigorates the farmer to try new farming techniques. You see where I'm going with this?
When you build your own products, you need to size your plant according to how much you're going to sell. Trouble is, you probably have little idea of how much you're going to sell. So sizing your plant properly is very difficult. Just like it would be a challenge for people trying to farm their own food. They're not quite sure how much to grow for themselves. Whereas if you outsource your manufacturing, your manufacturing partner can have a very large plant with lots of sophisticated equipment, because he shares that manufacturing capacity with many other OEM's. Those OEM's are greatful because they could never afford a machine sophisticated enough to place 0.3mm pitch micro BGA's. Just as a homeowner might struggle to grow an exotic plant that the farmer is probably already familiar with.
Let's take this analogy a little further. That farmer takes great pride in growing his crops without pesticides and artificial fertilizers. A good manufacturing partner has similar pride. He cares about his employees and does not want to expose them to harsh chemicals. He's going to make sure that he's given his employees the necessary tools to make sure they don't expose themselves to the harsh chemicals that are used in manufacturing. Additionally, when byproducts are produced, he'll make sure that hazardous materials are disposed of properly. As an example, WAi produces large amount of solder dross. This is solder that has been exposed to oxygen and is no longer useable. You can't just throw this stuff out, it could be very dangerous. So we've worked with a local company that comes by on a semi-annual basis, picks up our waste material, and then recycles or disposes of the material properly. This can be a lot to manage, but you as the OEM should never be exposed to this, because you've hired a reliable manufacturing partner that worries about those details for you.
Don't get me wrong. I understand there are other benefits to building your own products in house. But I wanted to take this opportunity to state that WAi firmly believes in outsourcing and takes great pride in delivering a quality product to their customers, just as a coop farmer takes great pride in bringing his neighbors fresh fruits and vegetables right to their door.