Friday, July 10, 2009

Hello? Is anyone there?

Greg Glockner, at the Dwaffler Decidedly blog, tells A tale of two outsourcings. The first is actually a counter-outsourcing story, as Boeing plans to buy one of their key suppliers for the "revolutionary" 787 airplane, running directly counter to their master strategy of strewing bits of manufacturing across the world and assembling the results in magically short time. This hasn't gone at all well, as I wrote about a year and a half ago:
This, of course, is the logical consequence of modern-day management thinking. You out-manage your risk by transferring it to others, relying on contract compliance to take the place of responsibility. You conceptualize or ideate, not even descending to the point of high-level design, rather shifting that to the "experts" who know better than you what you need.

But you can't take a contract and glue it into a working airplane. Perhaps Boeing will get some money back, eventually, through negotiation or lawsuit. Will they ever make up the deficit to Airbus in market or mind share? I doubt it.
Apparently the newest solution is to bring the suppliers into the company, so the mystical world of contract compliance will give way to the old-fangled solution of actually managing something.

Greg's second example comes from the world of telecommunications: Sprint is going to outsource their network operations to Ericsson:
So what will be left of Sprint? They don't manufacture the equipment. They won't operate the network. According to Matt Hamblen of Computerworld, "Ericsson will manage day-to-day operations of the Sprint CDMA, iDen and wired networks, while Sprint retains control and customer care under the deal."

Customer care? Excuse me while I laugh. Someone I know endured atrocious customer experiences from Sprint. It took months of letters - the old-fashioned, paper kind - to resolve a simple billing issue. Customer service is not a strength of the mobile phone industry.

Oh, and isn't customer care just another job that will be outsourced someday?
The answer to the last question is, of course, yes. Which will leave Sprint with control and...nothing else.

I may well have mentioned this before (my great ideas get lost in the swirling mists of time), but I think we're approaching the logical consequence of this thinking. Eventually, there will be a Fortune 500 company that will have about 12 employees. There will be a CEO, a few people who stay up all night to talk to the various suppliers around the world, and some flunkies who will make lunch and airplane reservations for the CEO. That'll be it.

The value of the company will not come from any value-added work they'll be providing, because there won't be any. The company won't make anything, won't sell anything, won't ship anything. It will simply be a holding company for a collection of brands, with all the work done by others as cheaply as possible. The CEO will negotiate contracts (at the highest level), check with the lawyers to ensure contracts are being complied with, give presentations to analysts, and do as much media as possible to "build the brand."

At that point, maybe we'll all finally understand that it is not a function of American business to employ Americans, and we'll stop accepting some pretty weak arguments that we have to do more for these companies. Then, corporate welfare will stop, lobbyists will have less influence on politics, and we'll be able to work for the welfare of the people.

Ha, ha, I made myself laugh.

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