Product Management with Offshore Manufacturers, Part Deux

I've been working with Paul Young of the Product Beautiful blog to do a cross-post collaboration on product management with offshore manufacturers.  This is a follow up to my first post, introducing Paul's blog and containing a video by Berlitz language schools, that I still laugh at when I watch "What Are You Sinking About?". 

To create this post, Paul put together his thoughts given his experience managing product development and manufacturing with some of his designers and suppliers overseas.  These are the bullet points.  I thought he did a great job and covered a lot of ground, so I simply added on some of my own insights to his points.  There is a lot of good information, and this is only the second of 3 posts, so without further ado:

• If you and your manufacturer are not proficient in the same language, investing in translation is an absolute must.  Don't rely on you understanding "just enough" and they understand "just enough" because your end product will be "just enough" too...

My thoughts:  Translators are a must for several reasons: 

1) Having someone whose core competency is language and translation will greatly speed the process of communication. 

2) A translator can help those in other cultures who are concerned with "saving face", avoid embarrassment when they do not understand.  Often, higher-ups in other cultures do not like to admit that they don't understand or are wrong.  A translator helps ease the obviousness of this. 

3)  Translators are better trained to ask questions when they don't understand and answer questions that verify their understanding.  In many cultures, people will tell you they understand when they really don't. 

4) Language is the tip of the iceberg when it comes to communicating across cultures.  For this reason, I would find a translator native to the country I am working in, who has a proficient command of english (usually, this involves a college major in English), who understands the cultural nuances of the culture you are dealing with.

• Negotiate EVERY thing up-front.

My thoughts:  In our own country, people often fail to take stock of all that is negotiable in transactions in general.  Clearly define the terms you agree upon with your vendor and get it in writing.  You may even want to take it as far as having the contract translated into their language, to leave no room for excuses of "I didn't understand".  You want to leave as little room as possible for this, because once you begin work, it is very very difficult to change the terms.  Also, if the relationship is important,
don't try to squeeze the people you are working with as hard as possible just to save every penny you can.  Often people go to other countries because they hear tales of rock bottom costs and want to take pride in
having procured the lowest costs.  Often, you get what you pay for.  Make sure there is incentive left in the deal for everyone and sow the seeds for a productive long term relationship.  This will save you money in the long run.

• If you're using an overseas design house, make sure you're clear on who owns the rights to the Intellectual Property when they're done

• For some reason, even though they make horrible margins on manufacturing vs. design, lots of design houses insist on manufacturing rights to at least the first run of a product that they have designed for you.  Negotiate the right of first refusal so you can either ask them to match costs with a competitor or you can opt to have your product built elsewhere.

My thoughts:  From a manufacturing and sourcing perspective, flexibility is a strategic must.  Compare costs whenever possible and never rely only upon a single source.  Have alternative options ready if needed.

• You can't communicate with an overseas design house or manufacturer like you would with your in-house Engineering or Development team.  Internally, I can give my Development team an MRD, to which they will respond with an Engineering specifications document detailing the "how" they are going to built a product to meet the MRD's specs, along with proposed schedules, costs, and tradeoffs.

• I have yet to see any overseas group (in our price points, we're a startup) that can handle a MRD.  They need to jump directly to the specs document, and they can't write it.

• Employ one of your Engineers to write the specifications, work with the overseas engineers, and communicate tradeoff decision points to Product Management.  As a Product Manager, you don't have the time or skills to chase around your contract manufacturer, when you should be focused on the strategic - what does the market want and how can we best deliver it?

My thoughts:  There are several barriers to effective communication when working with a vendor overseas:  time, language, culture, distance, technology, and more.  If you are going to have design done by an overseas design house, be sure to see a portfolio of work that reflects an understanding
on the designer's part of your culture and market.  Generally speaking, people from non-western countries will not be intimately familiar with the nuances and aesthetics of good western design, and are very unlikely to know your market.  Design houses will probably be better in this respect, but contract manufacturers will almost always not be competent in this area.

Comments

[Michelle Warford]

Amen to that. It's frightening enough - without language and cultural barriers - to execute meaningful contracts when you're a small business or start-up.

Last fall, the president of an international outdoor equipment company personally connected me to a foreign supplier his company had used. With every inquiry I made about their services, costs, etc it seemed the only thing they were effectively able to communicate with me was that they were pleased to do business with an associate of the man who connected us. After asking several questions at least 10 different ways and not getting any direct answers, I gave up.

As a business of one, I hadn’t thought I was “big time” enough to venture down the sourcing path. Your blog is a great tool for understanding the feasibility and possibilities of global manufacturing - as well as reinforcing the fact that effective communication makes the difference measuring progress by inches or miles.

[degrees]

Ashton
What does a MRD stand for?
Thanks Jeff

[Audall]

Michelle,
People are generally surprised how slowly the communication process can go. It takes patience and after awhile, one begins to learn little tricks that can be used to help facilitate
communication. Referrals are a good way to get connected overseas, but sometimes a supplier that worked for one particular company may not be suitable for another company's needs. I'm glad you're finding utility in the blog--that's one of my goals!

[Audall]

Thanks. I should have defined that in the post. An MRD is a "Marketing Requirements Document". Generally speaking, this is a document used by firms and product managers to determine and specify what features and benefits their product needs to offer. This document might in turn be passed over to the engineering folks, who then develop how those features and benefits will be provided for, physically, in the product.