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Outsourcing Decreases Time-to-market - a Case Study
Author: Dr. Joe Greco  | Posted: 31-07-2007 | Comments: 0 | Views: 13 | Rating: (50)  (?) 
With product life cycles shortening and global competition increasing, manufacturers are increasingly turning to outsourcing as a means to speed up time-to-market, while also remaining cost competitive. No where is this more true than in the consumer electronics business. Sonnet Technologies learned this lesson after struggling to remain competitive in the Apple Computer “after market upgrade” business. Based in Irvine, California, Sonnet Technologies has successfully diversified its offering with after market upgrades for computer processing units (CPU), peripheral component interface (PCI) cards, and other enhancement products for the Apple line of products, including the best selling iPod range of products. The challenge for Sonnet Technologies has been to anticipate the demands of the end consumer, while keeping pace with the constant changes involved in the dynamics of the evolution of Apple products. This has required them to react quickly to modify their product line and deliver the products when the market wanted them; this has not proven to be easy for Sonnet Technologies. Currently with 60 employees, Sonnet Technologies is the world's leading Macintosh hardware upgrade company offering upgrades for more Macintosh models than any other company. Their continued success is due in large part to a superior staff of engineers, all of who are dedicated Macintosh users. They are driven by their personal desires to invent ways to improve the speeds of existing Macintosh computers and hence the productivity of Macintosh owners. With a strong emphasis on customer service, Sonnet offers 24 hour, seven days a week technical support service. With the advent of new products from Apple, such as iPods and laptops, Sonnet Technologies realigned its strategy to focus on iPod accessories. Sonnet came up with the idea of an FM transmitter to wirelessly transmit and play the iPod files over the radio. Sonnet Technologies engineers, while knowing the Apple methodology but lacking the expertise and knowledge in FM transmitters, anticipated a short interval of time before the introduction of this exciting new product. After a frustrating year of trying to develop the transmitter, Sonnet Technologies finally decided to hire an ODM (Original Design Manufacturer) to develop the FM transmitter in Taiwan. Within six months of “offshore outsourcing”, the Taiwan based team successfully designed the transmitter. Unfortunately, this delay in the development, production, and shipments of the FM transmitters caused Sonnet Technologies to lose the first mover’s advantage for a premium product with high margins. While Sonnet Technologies had expected to sell 20,000 per month for their four models of transmitters, the delay slowed the sales to about 5,000 units per month. Having learned a valuable lesson about outsourcing, Sonnet Technologies knows that to be competitive in a high stakes game like the Apple Computer after market business, they must know their own in-house strengths and weaknesses. They also learned about the importance of putting design and technology in the right place, within the constraints of time is crucial in this global market today. In their case, outsourcing was the right decision albeit a late one. Epilogue: Sonnet guarantees to ship any in-stock items within 24 hours and any build-to-stock items within 48 hours. These core competencies have seen Sonnet Technologies win numerous awards, including being on the Deloitte & Touche’s “Technology Fast 500” two years in a row.
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Article Source: http://www.articlesbase.com/business-articles/outsourcing-decreases-timetomarket-a-case-study-191150.html
About the Author:Dr. Joe Greco is Director for the Center for the Study of Emerging Markets (CSEM) located in Fullerton, California. As part of the College of Business and Economics at California State University, Fullerton, CSEM was established to promote the flow of global information and technology between the academic and business communities. In particular, CSEM studies offshore outsourcing and it economic and cultural impact on US based emerging markets. You may contact Dr. Joe Greco at 714-278-2375 or csem@fullerton.edu or at http://www.thecsem.org
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