Outsourcing started with transferring manufacturing from a U.S. plant to a sister plant of a large corporation. It started with the transfer of parts with quality problems. An opportunity evolved that independent manufacturers started to perform certain steps, specifically chips assembly or device testing. Again, the opportunity transformed from better quality to cost savings by reducing cost of poor quality. Then, the cost of labor was added to the outsourcing opportunities. Now, the U.S. companies started to reduce cost of the product for the higher profitability. Challenges appeared as it became difficult to design new parts without the necessary manufacturing experience, and designers lacked manufacturing knowledge. Now, the designs suffered and design innovations took a hit. At one point, a factory in China thought if we make the parts, we even design it, the parent company in the U.S. simply markets the product and make money. Why? The factory bought the parent company. This is the cycle of outsourcing.

As U.S. companies increasingly outsourced, the suppliers started to control pricing, and the U.S. companies started to feel the pain of outsourcing. The cost of outsourcing is not just that of the part, but constraints on customer service, lead times, response to field failures, and the feeling of helplessness. The most critical impact on an economy like that of the U.S. is the loss of manufacturing capability, its adverse impact on design, innovations, and thus the value creation.

In my experience, outsourcing originally started due to poor quality, and created a false perception of reducing that cost of poor quality, and efficiencies gained by using the resources globally 24x7. The price to pay is too much for an economy like that of the U.S. We must learn to manage our portion of the total goods used in the country.

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The fundamental reasons for outsourcing were initiated due to lack of basic skills in a technologically advancing economy, and determination to do it ourselves. Being a prosperous society, we were willing to pay for the pain instead of butting heads with the problem. To bring manufacturing back, we need to be prepared to ensure best in class quality and manufacturing in America. We need to ensure the following:

1. Committed to excellence through national vision, need for excellence, and early education and practice excellence.
2. Positive and priority perceptions of excellence, wealth creation through excellence and innovation, both.
3. Process/systems thinking mindset – instilling to tackle intellectual challenge, instilling love for learning, awareness of the global challenge, and excellence, and understanding of need for excellence early.
4. Understand excellence as a prerequisite to innovation and entrepreneurship and make it an integral part of creativity and innovation.
5. Create curriculum for pursuing excellence in sports, life and work.
6. Create national promotion of excellence at all levels and in all fields, make tolerable instead of the first, a last resort.

All along, I was challenged by ‘C’ in PDCA (Plan, Do, Check, Act) model. The timing and terminology of the development of PDCA points to a product management model, where one plans to produce a certain number of items. Process thinking or process management has not been considered. The performance management begins with the end, the product performance verification, and travels back to in-process controls, in-coming inspections, supplier controls and finally design for manufacturability. Problem still remains then the leadership is brought into consideration, and leading to TQM, the total quality management. Benchmarking and the need for consistency led to the quality management system standards. One can think of QMS as a business management system.

C or the ‘check’ resulted in cost of poor quality (COPQ) and reducing the COPQ became a financial measure of the success of quality function. Global competition has led to overall quality improvement everywhere, however, still the mindset remains the same as the ‘C’ in PDCA. One can see that no new process model was developed since PDCA.

In order to make Made in USA the best in the world again, we need to do something beyond PDCA. We would need new models of process management or process excellence making ‘acceptable’ as the ‘unacceptable’ and excellence as the new acceptable level of performance.