One of the most important decisions a leader will ever make is to outsource production of their 
products to a third party contract manufacturing organization (CMO). In most cases, making this decision is a win-win in terms of efficiencies, focus, and the quality of the products being delivered to customers. But as we all know, nothing in business is as easy as it seems. I recently had the chance to sit down and interview a group of Sales Professionals in a business-to-business company that recently shifted all their manufacturing to a CMO. They shared that despite the promises of everyone involved, there were a couple of issues that occurred, the most serious being a missed delivery because the CMO ran out of a key chemical for cleaning their equipment after a batch run. Although the delay was only a day, it left the sales team scrambling and delivering bad news in a time when competition is breathing down their necks with low prices and guaranteed on-time delivery.
The impact on leadership when outsourcing was more severe than they planned for and there were several lessons learned to share. Below are three tips to remember when leading the perception of quality when outsourcing:
Know your strategy and know your customer’s strategy
Everything starts with strategy; if you don’t know where you are going, any road will get you there. Your strategy – and the strategy of your customers – should set the roadmap for your outsourcing strategy. If your strategy is Product Leadership, it is imperative that you choose a partner that has the capability of manufacturing and delivering the most innovative products in your market. You also must do everything possible to let your customers know that you have chosen the outsourcing strategy to increase the quality and innovation and haven’t made this choice to save money. Customers will initially be skeptical and great leaders manage this expectation.
Choose the right partner…with the right criteria
It goes without saying that choosing the right partner is critical. But where most leaders fail is choosing a partner with the wrong criteria. That criteria must be aligned to your strategy. As mentioned previously, if your strategy is Product Leadership, then you need to partner with a CMO that can manufacture innovative, high-quality end products. If your strategy is Customer Intimacy, your CMO must be set up for customization. And if your strategy is Operational Efficiency, then your partner must be able to product high volumes at low prices with customer-acceptable quality.
Measure quality from the customer’s perspective
Once you’ve engaged with a CMO, you must constantly measure the quality of your products no matter what the strategy. Another mistake most leaders make is they only view quality from the internal perspective and not the customer perspective. Great leaders set up systems and processes to measure quality from the customer perception through focus groups, surveys, quality tests, interviews, and designed conversations. This process should be a leader-initiated process and customers will react better and provide better feedback if senior leaders are the face of it.
In summary, outsourcing to a contract manufacturing organization can be an excellent business decision. But it’s not easy to execute. There are several critical things leaders do in order to make sure the perception of quality is being managed internally and externally.
