Impacts of outsourcing manufacturing

This paper investigates the impacts of outsourcing manufacturing on the management of engineering and technology personnel and assets. In a past project for a large telecommunications electronics company (the Company), the researchers developed a system for production scheduling and buffer sizing. Recently the company has considered spinning off its manufacturing operations to a contract manufacturer (the CM). Upper management has tentatively determined that CM can help the Company meet its strategic goals by concentrating on core competencies (e.g., designing new systems, servicing existing systems). Now, middle managers and technical staff are considering tactical details. Many of the pros and cons of contract manufacturing have been well-discussed in the trade literature. Briefly, contract manufacturers often have engineering and manufacturing expertise and economies of scale that enable cheaper, better, more flexible manufacturing. The goal of this paper is to consider certain important details that have not already been settled. These issues are of specific interest to the Company sponsoring the research, but should also be of general interest to other technological firms considering outsourcing their manufacturing operations