News and thoughts from CS Odessa, maker of the ConceptDraw product line: ConceptDraw PRO, ConceptDraw PROJECT and ConceptDraw MINDMAP.

Tuesday, December 4, 2012

What Makes Companies go from Outsourcing to Insourcing? The Need for Innovation!

Was Outsourcing a Mistake, or Just a Blip?
The December 12 Atlantic Monthly has a couple of great articles on the rise of insourcing. In The Insourcing Boom, author Charles Fishman makes a pretty stunning assertion:

What is only now dawning on the smart American companies, says Lenzi, is that when you outsource the making of the products, “your whole business goes with the outsourcing.” Which raises a troubling but also thrilling prospect: the offshoring rush of the past decade or more—one of the signature economic events of our times—may have been a mistake.

People Working Together IN THE SAME PHYSICAL LOCATION to Innovate a New Product

The gist of Fishman's article is that markets move too quickly now for manufacturers to outsource production. To evolve a product at the speed consumers expect, companies need to draw on the skills of all the people involved in the production process--from engineers to line workers to sales people.

And as great as web collaboration software is, as helpful as Skype calls can be, companies are seeing the most benefit by putting people together physically--not virtualy--to reeeningeer old processes and innovate new products.

Fishman has some great examples of how this works in the real world. He tells one story of how a team of GE employees in the U.S. got together and reimagined how to build a dishwasher. When they were finished, they had eliminated 35 percent of the labor required to build one.

Less, but Smarter, Use of Labor
That's pretty amazing. But what is even more stunning is what they did with that extra 35 percent. GE management asked the team to pick a dishwasher part they thought they could build better here in the U.S. They chose a part, reinvented and improved it, and then went on to try to improve other parts.

And that, Fishman says, is how "the outsourcing cycle starts to turn. Once you begin making the product itself, you get the itch to make the parts, too."

How cool is that: The turn of the cycle from outsourcing to insourcing. This change points to the importance of innovation, of real-time collaboration across teams. I can't help but imagine one of these teams in a room, with MINDMAP up on the wall, brainstorming how to "build a better mousetrap."

Can Your Company Do Better Through Cross-Team Collaboration?
This global turn of events is pretty exciting for companies like CS Odessa, which has always believed in the power of creative people working together to solve business challenges.

So what about you? Does your company outsource? What would happen if you started manufacturing your products right here in the U.S... if you put your U.S. workers together to help them innovate the next product. You would be in some very good company if you gave it a try!

Note: Fishman's article provides a number of other very tangible reasons why the insourcing trend is gaining strength here in the U.S.

Visit to see how our products can help your teams innovate.

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