Navigating the new era of outsourcing

Untitled Document Not just the multi-national corporations, but the home-grown small businesses that have made Europe and provide the backbone for a nation’s continued economic growth. Of course there are always those who prefer to resist any changes to their way of doing business.

Two years ago, we approached a local maker of plastic lawn furniture with a proposal to reduce costs by outsourcing their product line to China. The offer was rejected. The company argued that their customers would remain loyal despite competition from lower priced suppliers and that the quality of their product could not be matched by offshore manufacturers. When the company lost 70% of sales and reported an operating loss of $2 million USD, they called us to rescue their business, but they were already too far into the death spiral and beyond our help. The family run company closed its doors, costing 90 people their jobs.

This business failure did not need to happen.

What matters most for these troubled small businesses is their attitude about change. They can ignore it, resist it, adapt to it, or embrace it and lead their company into a new environment.

I currently serve as the President of International Smart Sourcing, a small company which specializes in assisting other small to medium size companies in outsourcing their manufacturing to China.

We do our work very well. So well in fact, that we have been selected by the International Association of Outsourcing Professionals as one of the top 100 outsourcing providers in the world. Additionally, our revenues have grown 98% in the last year.

I attribute this growth to my belief that if you are or were a small US or European manufacturer, you have likely questioned “Who Moved My Cheese?”(Spencer Johnson) and subsequently learned that because “The World Is Flat” (Thomas L. Friedman), your old cheese is now in China. If you choose to seek new cheese before you starve, you are my potential customer.

Outsourcing challenges the norms of many lives in many ways. I remember vividly my father’s reaction to the first Japanese made car I purchased. My arguments of lower cost for more reliability and better gas mileage fell on deaf ears. Whether the challenge of outsourcing is a threat or an opportunity depends upon the personal equation that each of us makes to connect the past, the present, and the future.

Those who have adapted to change have used outsourcing as an intervention and stopped the financial bleeding. Those who have led their companies to the “new cheese” have not only retained old jobs, but frequently have created new jobs as a result of growth in revenues. The Bureau of Labor Statistics reports for the years 1999 to 2005 show a loss in the United States of 3.1 million jobs in manufacturing and an increase of 5.3 million jobs in services as well as an increase of 1.1 million jobs in finance. So while it is a fact that outsourcing eliminates manufacturing jobs, it is equally true that it creates jobs in other sectors.

For most of us, change is not easy. But change is not a new challenge to European workers and because it is inevitable, it must be recognized and dealt with. As a source unknown to me once said “When we cannot direct the wind, we can adjust the sails”… and International Smart Sourcing, Inc. can be your navigational guide.