Identifying core competencies is essential to strategic outsourcing. A medical monitoring device company was interested in learning whether its competitors outsourced the manufacture of printed circuit assemblies (PCAs), or assembled them in-house. PCAs are the high-technology components that run the devices' programs. Scale, density (the number of components), and engineering time are all part of the equation to determine whether a PCA should be assembled in-house or outsourced. As board space becomes smaller and the number of components increases, the need for precise assembly at a low cost becomes critical.

Fuld & Company’s research demonstrated that no matter which manufacturing methodology was used, successful programs were the ones in which complete commitment and a strong partnership between supplier and the OEM was formed. Key factors in making this decision included cost and core competency, as well as the need for greater-or less-inventory flexibility.

Benefits and implications

The client recognised that its core competency was in the manufacture of the device, not the individual components. As a result of the research, the client opted to divest itself of its PCA facility and outsource PCA manufacturing. This ultimately produced better quality control as well as significant cost savings.