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 www.conceptdraw.com to see how our products can help your teams innovate.

Concept Mapping Toyota’s 8-Step Lean Manufacturing Methodology

Lean Manufacturing is a core fundamental for businesses that focus on delivering a quality product to their customers, while minimizing production waste. Toyota has a variant of this called the 8-Step Process that is very popular because of its ease of implementation and success in the improvement of an existing process. The 8-Step methodology is a business philosophy that is a proven way to solve simple to complex issues that often vex companies.

The first of the 8 steps is to identify the problem by using quantifiable terms to describe the current situation. What is the problem, in what process is the problem occurring, who is involved with that process, at what point in that process is the problem occurring, , is the cause of the problem known, and what is the relative magnitude of the problem? It is important to have physical evidence of the issue, if possible. Many people will use a physical sample, photos and even drawings to describe the problem’s nature. This step of obtaining the evidence will often eliminate any false alarms that might cause an unnecessary effort.

The second step is to break down the problem. Is the problem universal, does it occur in only one plant, and does it occur on only one machine? If the problem is occurring in the field, do you have a process in place that allows you to track failures back to the process that produced the part or assembly. When a problem does occur, it is imperative that there be a path available to track from the incident to the inception.

Now that you have identified the problem, it is important to set a target. Once you have gone through the process, what is the ideal or planned outcome? This third step establishes the performance baseline and the end goal. These are two very important elements to this problem solving process.

The forth step is to find the source. What causes the problem? It is important to review the process being investigated and the current controls. Questions that can be asked are ‘What has changed?’ or ‘What anticipated event did not occur?’ If the answer is not clear, then a systemic issue exists and additional physical analysis is necessary to determine root cause. Discovery of the root cause must be accomplished to progress to any other steps.

Now we get to the problem resolution stage. In step 5 we implement corrective actions, the team defines and implements the best corrective action, and ongoing controls are implemented to make sure that the root cause has been eliminated. Once changes have been put into production, it is important to monitor the long-term effects that have been put in place. And of course, all changes implemented must be documented—the appropriate control plan, process flow documentation, and appropriate work instructions.

In step 6, it is necessary to verify that the selected corrective actions will resolve the problem and that the changes will not cause any undesirable side effects to occur.

Step 7 is the evaluation of the modified process and its results. This is a good time to look at the issue and the identified solution in its entirety. What can be learned from this important step that will have potentially a universal impact on how your business is conducted?

The final step is to standardize successful processes to build quality in to the product and to resolve any future shortcomings in the manufacturing process. Quality has such a demonstrable impact on customer buying patterns today that methodologies such as Toyota’s 8-step problem solving have been widely adopted many manufacturing organizations and the United States Air Force.

Click here to download a template for the 8-step problem solving solution.