Strida Bicycles, a West Midlands, UK-based producer of the latest generation of folding bicycles, first considered outsourcing as a route to streamlining its business process functions in 2002, when it was transitioning the production of its flagship folding Strida bicycle from the UK to Asia.
On top of the production move, the company was also engaged in intensive product development on the bike’s frame and wheel to improve performance and reduce the folded size of the bike, which involved three major redesigns. In addition, the company had agreed to provide an important Italian customer with 1,000 bikes eight weeks after the transition. The UK manufacturer knew it could not meet this promise.
Finally, those involved with this development were in different locations, which presented Strida with logistical problems. “Our office was based in the east of England, our lead designer was based elsewhere in the UK, and the head of our UK manufacturing unit was in China carrying out prototype work for us. We desperately needed a collaboration tool that could tie the production engineering and product development team together in real-time, as poorly managed communications between such disparate players was a recipe for disaster,” explains Steedman Bass, Strida’s president and CEO.
Bass admits that transitioning a product to volume manufacturing on top of an active development program is very difficult.
Strida needed infrastructure to support its offshore manufacturing move, as well as improve its capability to drive further product development. And it needed to get it done fast, as there was no time or money to go with an internal client-server solution.
Facing this exasperating situation was not easy, but outsourcing was the easy answer.
Strida became connected with the kind of third-party, supply chain management (SCM) provider it was looking for through non-traditional means. A Strida customer based in New York City visited the company’s manufacturing in England en route from a business trip to London. There, Bass described Strida’s problems with the transition of production.
“He happened to be a journalist and analyst covering process-change management and was familiar with an outsourced solution that could assist us,” he says. Strida contacted Arena Solutions, a Mountain View, California-based service provider with its own online product lifecycle management (PLM) software, and became a customer within days. “Our selection process was to implement a user-friendly stable tool, backed by decent customer service. We quickly discovered that Arena was all three,” adds Bass.
Managing Manufacturing Changes
Strida implemented the Arena PLM solution within two days during August 2002. According to Michael D. DeLapa, VP of business development for Arena, the fundamental role of the PLM application is to serve as the system of record for all product specifications, including parts, items, approved manufacturer lists, and related documentation. Strida’s engineering team develops this information during product development and then shares it with other members of the enterprise, as well as design chain partners as the product moves through its lifecycle, DeLapa explains.
Since implementing this new approach, Strida’s management, production, and engineering teams never worry about whether or not they have the latest document. Bass says that Strida has made a minimum of 500 percent return on investment in terms of reduced paperwork.
“This benefit is invaluable in preventing scrap production runs and reducing check and recheck communications. It also eliminates the negative communication effect of operating in different time zones,” he adds.
Now that its supply chain information is consolidated rather than dissipated, if Strida needed to change manufacturers again, Arena PLM would allow this transition to happen quickly.
Bass explains: “Arena PLM is an easily accessible ‘pit’ into which our two engineers can throw their collective genius. Every time we issue a new drawing, we identify a new solution, issue a new spec and take the relevant photo for Arena PLM. This makes information sharing very easy.” If Strida had to change manufacturers, it could do so in five minutes by providing a logical and easily accessible multi-media library to any interested party, containing a well-documented history of problem solving.
Bass believes “any company that runs product development or redesign in parallel needs an outsourced PLM solution.”
Outsourcing one business process leads to others
Research published in August 2003 by Nelson Hall, the Berkshire UK-based, BPO research firm, found that 80 percent of organizations require assistance in both supporting and optimizing supply chain systems.
“Since 2001, businesses are either moving towards optimizing existing SCM technology investments, or outsourcing these functions. BPO capabilities are becoming increasingly important,” says John Willmott, a senior analyst with the firm.
For Strida, the further outsourcing of its business process functions has become a preferred choice. The company now currently runs most of its business on the Web. It has outsourced its document management and storage functions, customer service management, accounting, and logistics.
“We will only stop outsourcing when we have reduced our business to its core competency. There are always competitors better that you in business, so the trick is to narrow your focus to give yourself the best chance of success,” notes Bass.
Lessons from the Outsourcing Journal:
- Implementing a product lifecycle management solution keeps all documentation updated in real-time regarding any product changes. This reduces paperwork costs.
- A third-party PLM provider offers greater flexibility and speed when transitioning production from one manufacturer to another, while simultaneously meeting high-volume demand.
- A PLM solution provides a critical platform for maximizing the operational efficiency benefits offered through outsourcing SCM functions.