Offshoring and Outsourcing—Lessons from a Personal Journey

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Issue #11241 - August 2019 | Page #86
By Andrew Carr

How did this Australian component manufacturer become involved in offshoring? It started with a trip to Vietnam in 2004, and it ended much differently than I would have expected!

I had been operating my company in Australia, Truss-Rite, for 16 years, selling prefabricated wall framing and roof trusses. For a point of difference, we also offered a supply and install service. Being a licensed builder, I founded Platinum Homes, specializing in custom designed and built larger homes. It was one of my housing clients who took me on that fateful tour of Vietnam.

Immediately, I saw an opportunity for a light weight and fast construction solution for this large emerging economy. Their existing methods were slow and labor intensive, to name just a few of the challenges they faced which we could address. So, with great enthusiasm over the next year, I secured land, built a factory, applied for and received my business licenses, etc. Although I also had to import the treated lumber I used, I became the only component manufacturing plant in Vietnam using it, and I even developed a low-cost affordable kit home.

Fast forward 3 years and I was out of cash and the business had failed (those 3 years hold a much longer story than I have space here to document). I had burned through over 2 million dollars with nothing to show for it. But, instead of taking every bit of sensible advice and leaving Vietnam, leaving me a failure and possibly going bankrupt, I was determined to prove that I was a fighter who needed to find a new opportunity.

My former factory of 30 workers now employed only an office staff of 5, but we still knew the construction business. Using the resources we had, we started doing design work for component manufacturers in Australia. Over the next 18 months, we operated by charging on a per-job basis, sharing the work between our in-house designers. The external hurdle we faced was the negative perception of offshoring—it was not a popular thing for our clients to do. The internal hurdle, however, was equally difficult—it was hard to achieve consistent quality. Yes, our designers were all university graduates, well trained, and very motivated, but the quality would bounce around.

At the beginning, we operated like the traditional offshore/outsource model: a customer submits the project, it goes into a pooled resource design department, and then the work goes through a design, check, and return process. Just like my prior experiences with outsourcing, we offered a trade-off between cost savings and potential quality/delivery issues. But that just wasn’t good enough!

So, with nothing to lose (I had now not taken a salary for 3 years), I decided to work on fixing these classic problems. I created my own rules on how we would work and engage our clients:

  1. First, each client has allocated staff working only for them.
  2. Second, the client must engage in training too (which could be onsite in Vietnam or in their home office/country).

For outsourcing to really work, the provider needs to be part of the client’s business—to understand the client’s needs and be a part of the client’s journey. At our start, we employed university graduates, gave them 3 months of internal training, which included hands-on training from the software company, and our young staff quickly mastered the software and plans. The problem was: we had many well-trained young software operators not designers. They were missing the 10% “secret sauce” which connects the what and how with the why of the job. This connection was found with engagement.

In our first implementation of having an allocated staff member and client engagement/training, we solved the problem nearly overnight. Then, I took the same model and challenged my team to replicate it with other building-related clients. It was working! Quality and communication were rising, so we kept going. We took on drafting, full housing take-offs, HVAC, electrical, roofing, and many other tasks. Sure, we still had some failures, but we found that, when a client is prepared to engage and is well documented internally, they can expect at least the same amount of productivity and errors as an internal employee. We had become the equivalent of a remote office, rather than simply an impersonal outsourcing option.

I always say to anyone contemplating outsourcing/offshoring, if you employed someone in your design department today, would you just sit him or her at a desk and not engage/train/share? In my experience, if you do look for an offshore/outsource solution, find a partner, someone or a company you feel you can work with. Treat them as an extension of your business. Have them “fit in” with your existing design department. Set a very clear expectation, agree on KPIs, and involve them in your group training. They need to see your business as an individual and understand your needs too.

I’m certainly not trying to tell people what to do, and the truth is that there won’t be one perfect solution. My advice has always been that, if you can find a person to come to work in your office for fair pay and conditions, then employ them! Most of the clients I engaged with just could not get staff locally. Whether it was Australia or New Zealand, Canada or the USA, our clients faced the same challenges of employing local staff for their component manufacturing, builder, and other supply chain businesses.

Now that I have retired from Platinum Global this year, I have left an office containing more than 1000 full-time staff. This personal journey has been challenging but rewarding, and I am amazed at what we’ve built.

You're reading an article from the August 2019 issue.

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