Innovation: Is Offshore The Only Way to Outsource?

Posted by Chuck Kocher
On May 12, 2014

When we think of innovation, we often think of technology or of new products or markets. And while those things are certainly signs of innovative thinking, not all of us are going to come up with the next iPad, or Google Glass. But innovation and creativity isn’t restricted to gadgets and technology. There are other ways businesses can be creative and innovative—and successful.

Sometimes just finding a new or different way to do something can provide your business with the edge it needs to get a leg up on the competition. If you’re in a business that relies on other businesses for manufacturing or for technology support, you know that keeping the costs on those outsourced activities under control is crucial to making your bottom line.

Too many businesses, however, assume that the only way to do that is to ship those activities overseas. An increasing number of U.S. companies, however, are finding ways to keep costs down—while keeping the work in the U.S.

In February 3, 2014 issue of Fortune Magazine, Gazelles CEO Verne Harnish discussed five ways that U.S. companies can profitably take advantage of things that are “made in the U.S.A.” Here are some highlights from his article.

  • Invest in Efficiency: Kimray, a profitable family run business in Oklahoma City spends more than 50 percent of their annual capital budget on new machines that enable the company to work faster and generate less waste—making them more competitive.
  • Train Internal Talent: One reason many companies send tasks offshore is that there is a shortage of skilled machinists in our country. But instead of sending those functions overseas, Kimray offers extensive in-house training to new employees, emphasizing math and technology. And they offer continuing education to motivated employees.
  • Keeping It Local: Many manufacturers assume they have to go to overseas markets for competitive pricing. But sometimes it just takes a bit more thought and searching to find a local source that’s just as competitive. That’s what 800razors did—finding a U.S. factory that was hungry for new work. In addition to keeping manufacturing costs down, keeping this function in the country reduces shipping and logistics costs.
  • Capitalize on Emotion: There is a huge benefit to being able to claim that your product is “made in the U.S.A.” Domestic employment is still the number one concern of many Americans, and many of them are more than happy to support efforts that strengthen local economies. Companies like Kimray and 800razors capitalize on that emotion.

Just because your company doesn’t come up with “sexy” new technologies or products doesn’t mean that you can’t be creative and innovative. Sometimes it’s the way you get the job done that’s creative and innovative.

When is the last time you took a look at how you do what you do? Can you find a better way that will keep you competitive and give you an edge over the competition?