Rover Group Outsources to Shift New Model Introduction Into High Gear
The MG sport car is its history. The MG Salute car is its future. The M.G. Rover Group decided to outsource so it could introduce its new models faster.
Normally the company, the oldest automobile manufacturer in England, requires three years to design, engineer and introduce a new model. This time the Longbridge, England company didn’t have that kind of time, according to Paul Rose, head of parts quality manufacturing for the Rover Group. “We need to work shorter and smarter,” he says.
The goal was to introduce the new models in just 12 months. That includes the Salute, which “completely relaunched the MG brand” and the Saloon, a sedan model, to the Rover line.
To meet the compressed schedule, the car maker decided to outsource the routine quality control activities so its staff and engineers could concentrate on introducing the new models. Rover outsourced its quality control activities to Aktrion, a business process outsourcing vendor in Banbury, England that specializes in automobile parts logistics.
“Rover is going through a change and it didn’t have all the necessary resources to do it all itself,” says Keith Taylor, chairman of Aktrion. “We’re helping it drive over the hill.”
Aktrion employees inspect parts to make sure they meet Rover’s specifications. If a part fails the inspection, they resolve all disputes with the parts supplier. If necessary, they will modify the part so it meets the requisite specs. They also perform detailed checks of the metals. Rose says his staff views Aktrion as “an extension of Rover’s team of engineers.”
For example, when a door casing arrives, an Aktrion employee will examine it for cosmetic and internal defects. If the engineer discovers a clip is missing, he will add it.
Resolving Quality Problems Quickly
Resolving quality control problems quickly is crucial to profitability. The factory produces 200,000 cars a year. If the flow of parts stops, the production line halts. “This is very expensive for us,” he says.
In the past Rose says Rover has waited one whole shift to work out a quality problem with a vendor. This happens when the vendor is located in another country that is not just an hour away. Many of its parts manufacturers are in Eastern Europe, making it more difficult to get to England instantly.
Using suppliers located far from the factory gate is becoming more commonplace as supply chains become globalized. The auto manufacturer doesn’t have the time to maintain personal relationships with these suppliers. But Aktrion can. “We are the voice of more than 700 auto suppliers worldwide,” says Taylor.
Aktrion has installed a fast track problem resolution process. “Outsourcing has helped us remain competitive,” says Rose. “Our customers get mad when we can’t ship their MG when we promised,” he says.
Quality control has become a competitive issue “because the consumer doesn’t want to be the quality control manager any longer,” observes Taylor.
The outsourcing arrangement is flexible. Aktrion may have one or as many as 20 people working with the Rover engineers. “Aktrion is very flexible. If we have difficulty with a supplier, we will tell them we need six additional people tomorrow and they will show up. Aktrion has the resources to give us this support,” explains Rose. Eight to 10 people are the norm.
Lessons from the Outsourcing Primer:
- Outsourcing quality issues keeps a company competitive because consumers cease buying problem products.
- Outsourcing helps a company deliver a quality product to its customers faster.
- Outsourcing adds flexibility to the employment roles because it allows companies to add or subtract people daily.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].