Starting and managing outsourcing partners is a complex and difficult process that is often misunderstood and neglected with disastrous results for all.  Success is laid in the foundation beginning of the project as much as in the middle and beyond.  Taking the lowest bid without a full understanding of all the risks is the surest path to career dead end and no good for anyone.   Build a good team with a good leader.  Empower them to define and lead the program and give them the right amount of support along the way.

Building the foundation of a successful partnership starts with a good understanding of what you are doing, why you are doing it and the risks you can expect along the way.  Carving out an existing operation or sourcing to increase capacity are vastly different than sourcing a new product for a startup company with no hard assets.  Companies in the latter situation need to get outside help without question.  Companies that are outsourcing part of an operation or certain product lines have an understanding of the undertaking.  The challenge is finding those people, bringing them together and motivating them to make someone else successful doing what they (and their friends in the company) are doing today.   Not a task for the feint of heart.

If I had to pick one task or decision as the most critical determinant of success of the project it would be selection of the project leader.   Don’t make the mistake of assigning the one person who understands the product and process more than anyone else at the expense of all other skill dimensions.  It’s also more than just assigning it to a VP.  The right amount of technical knowledge is dependent on who you put around them on the team.  In outsourcing an existing operation, the project  leader needs to have strong interpersonal skills to manage the strong emotions surrounding the project.

Once the team is formed the next critical phase is defining the requirements and writing a preliminary statement of work.  The more detail here the better.  Anything important left unclear or unsaid will surely result in misunderstanding and sow the seeds of discontent.   As with anything involved here, don’t be an intellectual martyr.  Admit you aren’t sure and get second or third parties to challenge your idea of complete.  Meet with suppliers as part of the preliminary RFP/RFQ process to insure they have a solid understanding of what you are looking for.  Their questions will improve your documents.  Lead them to restate their understanding of your needs in their terms.  If they can’t do it well, they don’t.

Remember that the salesperson always wants your business.    Salespeople get paid to bring home business from new clients.  The best and smartest companies screen their prospects and will avoid considering projects that don’t fit their strengths.  Is your business really attractive to the prospect?  How do they measure their business and their customers?  Are you in a ‘focus segment’?    A question I love to ask is “Who are your top customers and if you win my business will I make that club and why?”   The answer to this question and the following discussion is very important to understanding your prospects for managing the relationship and the risks associated with it.  If you make it into the top customer club, you should get the regular attention of top management.  If you get the regular attention of top management, that usually means you get the ‘A team’ on your project – or at least B team players they project to develop quickly into A team players which can be even better because sometimes the A team is spread too thin.

Selecting an outsourcing partner has often been paralleled to a marriage.   I don’t know the statistics but even the worst Hollywood or Wall Street divorce can be cheaper than an outsourcing disengagement.  Just as the start and middle phase of the program must be clearly understood, so should the end.  Who owns what?  What are the ‘bridge’ responsibilities?  The more detail here the better because once disengagement is public all the other motivations go out the window and it all boils down to what is clearly on paper.


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