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Riordan Manufacturing's Offshore Outsourcing Plan

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									        Riordan Manufacturing's
       Offshore Outsourcing Plan

               Gail Bethea

10/26/2011                         1

 General pros and cons of offshore outsourcing.
 Advantages and disadvantages of offshore
  outsourcing of Riordan’s R&D processes.
 The steps to successful R&D offshore outsourcing.
 The phased approach to offshore outsourcing of
  R&D processes.
 Performance metrics for R&D offshore

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             General Pros and Cons of
              Offshore Outsourcing
 Pros:
        Bettering the economy of the United States.
        Improving ROI by reducing organizational costs.
        Strengthening American’s abilities to learn, diversify,
         and innovate.
        Allowing companies to tap the world’s best talent and
         putting that talent to work.
        Remaining competitive in a global marketplace.
        Concentrating on organizational objectives rather than
         day-to-day functions.

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             General Pros and Cons of
              Offshore Outsourcing
 Cons:
        Low success rate offshore outsourcing of many
        Quality concerns.
        Time zone differences.
        Language and cultural barriers.
        Commitment to providing a high level of project
        High employee turnover rates.

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         Advantages and Disadvantages
         of R&D Offshore Outsourcing
 Advantages:
        The reduction of costs, which are indirect as well as
         direct costs.
        Minimization of business risks.
        Faster time-to-market of business’s products, processes
         or services.
        A higher concentrated focus on the business’s core
        A greater access to new technologies and competences.

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         Advantages and Disadvantages
         of R&D Offshore Outsourcing
 Disadvantages:
        Amplification of current problems that threatens
         outsourcing in general.
        R&D has an ethereal nature that can cause challenges of
         established goals and expectations.
        Requires a high organizational commitment with close
         supervision from local staff.
        Project splitting, selection of several service providers,
         and post integration of production processes.
        Sharing of strategic and confidential company
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             The Steps to Successful R&D
                Offshore Outsourcing
 Identify the best-fit functions to outsource.
 Clearly define the outsourcing details.
 Develop a project plan.
 Establish monitoring systems.
 Evaluate outcomes.
 Define project milestones.
 Detail performance criteria.

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             Phases of R&D Offshore
              Outsourcing: Overview
 Central theme of streamlining and
  standardizing organizational operations.
        Do not concentrate just on reducing costs.
 Identify and mitigate risks.
        Choose vendor or service provider judiciously.
        Develop and implement a disaster recovery plan.

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                  Phases of R&D
               Offshore Outsourcing
 Phase I—Strategy, Planning, Risk
  Mitigation and Idea Phase:
        Onshore identification of an idea that will
         streamline and standardize operations.
        Detailed analysis of systems.
        Development of offshore business processes.
        Risk mitigation development plan.

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                  Phases of R&D
               Offshore Outsourcing
 Phase II—Solution Design:
        Finalize offshore outsourcing requirements.
        Vendor selection.
        Define service levels.
        Negotiate vendor contracts.

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                  Phases of R&D
               Offshore Outsourcing
 Phase III—Implementation and Transition:
        Project prioritization.
        Organizational alignment.
        Training of key stakeholders.
        Work transition.
        Process integration.

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                  Phases of R&D
               Offshore Outsourcing
 Phase IV—Manage and Optimize:
        Performance measurement.
        Fine-tune processes.
        Continued risk management.

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         Performance Metrics for R&D
             Offshore Outsourcing
 Judge success by a product’s reduction in
 China’s cutting-edge R&D deliverables.
 Limit inhibiting factors that prevent a
  successful time-to-market.
 Combat problems proactively in logistics.

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 Offshore outsourcing of R&D processes:
        Allows concentration on organizational objectives rather
         than on day-to-day operations.
        Provides a significant, competitive advantage.
        Follows a systematic approach and plan to guarantee
        Specifies particular functions to outsource.
        Strives towards the key metric and measurable

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 Costello, J. & Kren, L. (2005, January 6). Offshore
  outsourcing is both inevitable and a source of U.S.
  manufacturing strength. Machine Design, 77(1). Retrieved
  February 12, 2005, from database EBSCO.
 Renodis Global Outsourcing Solutions (2004, September
  10). Realizing the value of offshore outsourcing. Retrieved
  March 1, 2005, from website

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 Rosenblatt, M., (2004). Outsourcing: Why and how.
  Retrieved March 1, 2005, from website
 Vetta Technologies, (2004). Research and Development
  Offshore Outsourcing. Retrieved February 25, 2005, from

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