Running a complex large-scale industrial operation requires a vast amount of expertise and an equal amount of good judgment, especially when it comes to deciding which functions to fulfill in-house and those best to outsource. In the end, it is not possible to excel in every function on your own – recruiting the best talents, developing knowledge, systems and processes in every area is too great a challenge to any company. Choices must be made.
While each sector, business and company culture will vary, a reliable guiding principle to follow when considering these choices is: Focus on your core. Keep all functions that are core to your business in-house as these operational areas are vital to ensuring your organization’s competitive advantage. For example if you’re running a paper or pulp plant, don’t hand over control of any functions directly related to managing the final product. Non-core functions, however, can be considered – and, indeed, may be executed more efficiently when outsourced. Now, let’s consider some of the key questions that come up for executives as they analyze these core decisions.
How do I evaluate which functions are core to the operation?
Assuming your company has taken the strategic decision to keep manufacturing in-house, you’ve already taken the first step. You most likely have several performance indicators, like the OEE (Overall Equipment Effectiveness), in use to help track your operation’s ability to compete. As long as your R&D, process engineering and quality departments function seamlessly and in tandem in order to minimize costs, optimize the production performance, improve quality or add flexibility and agility, your company will maintain a good position. So,as a guiding principle, consider any processes and functions that have a direct impact on your key performance indicators as sacred ones, i.e. your core functions.
In terms of performance indicators, keep in mind that being in the driver’s seat will enable successful understanding, accurate measurement and your ability to effectively contribute to an efficient operation. Understanding and measuring are easy – but the latter can be more challenging as it requires serious process and quality engineering.
For example, take any continuous development framework and you will notice that the first step of the process will be intertwined with information gathering, data collection or data/process analysis. The same applies to developing performance – the process needs to be structured and data-driven right from the beginning all the way to communicating and implementing the findings. The talented and curious people in charge of that process, i.e. engineers, can be considered the soul and incarnation of your competitive edge.
How does Trimble support industrial plants in making these important decisions?
At Trimble, we work in the field of process analysis and diagnostics. We have supported many companies contemplating in-house and outsourced approaches to process and quality development. While some companies proudly maintain and develop their process knowledge in order to improve the performance, there are others that have chosen to outsource troubleshooting and process development. In our experience it is the first group with the brightest, and most sustainable, future.
The second group are essentially asset owners. This includes industrial plants that opt to outsource their efficiency development to automation and algorithms. They implement cutting-edge technology and let it take care of challenging tasks such as optimizing the process. There is some merit to this rationale, however, a system is only as good as its configuration and embedded models. Furthermore, all systems and equipment are available to everyone.
In the end, the way to make a true impact comes down to how you use and configure the best available technology. For today’s most successful operators, we have discovered that this decision should be based on protecting – in-house – those technologies, processes and proprietary intel that contains the core knowledge of running your business.