Performance evaluation is of utmost importance to organizations for it involves assessing whether the commitment of financial and physical resources to tasks has been used prudently or not. This evaluation becomes all the more important in a product outsourcing company. This is because it involves paying hefty amounts for getting the tasks done. Moreover, if it is not of the required quality, it may ruin the client organization-s image. Performance evaluation in case of product production outsourcing company can be done on four grounds- Financial, Customer, Internal Processes and Continuous Learning and Training Perspective.Financial assessment is possible with indicators percentage increase in labor costs, percentage increase in revenues, percentage rise in operating costs and percentage expenditure on research and development. This would help in more wise use of funds.Customer perspective can be known from percentage of defective products, timely delivery of products, continuous reporting and integration capabilities. This parameter will help in providing more customized solutions to the clients.Internal processes perspective can be obtained from percentage time decrease in product development, success rate of new products, percentage time allocated for Q.A., quotation supplying time and percentage first-pass products produced. This will help in ensuring that the quality of work done conforms to the standards set.Continuous learning and training perspective can be had from number of technical training sessions, number of product design sessions, number of focus group sessions and number of safety training programs.
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Product Outsourcing relates to the decision of getting the product related tasks done by another party. This involves zeroing on a suitable vendor for this purpose. This filtering act requires an appropriate screening procedure to be implemented.
Organizations go for outsourcing product decisions as they find 'cost effectiveness' or 'better expertise' in getting the job done by another company.
However, one cannot adopt a laid-back attitude by transferring the 'product' responsibility to another organization. This is because the act of subcontracting brings with itself a whole new set of pros and cons. The outsourcer is required to implement a system for close monitoring of the process. This ensures that all aspects involved are given the deserving attention and completed with utmost precision.
One can effectively carry out the job of product off-shoring by using the metrics that are found useful for judging the effectiveness of the whole process. These indicators that are attached with values do their bit in guiding the organization for future decisions.
To sum it all, one can accurately proceed with the task of evaluating 'transfer of management' using indicators that are arranged under related categories on a Balanced Scorecard (BSC).
This is the actual scorecard with Product Outsourcing Performance Indicators and performance indicators. The performance indicators include: product outsourcing, financial perspective, % increase in labor costs, % expenditure on research and development, % increase in revenues, % rise in operating costs, customer perspective, % defective products, timely delivery of products, continuous reporting, integration capabilities, internal processes perspective, % time decrease in product development, success rate of new products, % time allocated for q.a., quotation supplying time, % first-pass products produced, continuous learning and training perspective, number of technical training sessions, number of product design sessions, number of focus group sessions, number of safety training programs .
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