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by by Craig Howell

Managing the operations of any lab, from inspection to metrology, calls for solutions that will fit the budget and satisfy customers. When customers request products or lab services that you don’t presently provide, you must decide how to handle the request. Although subcontracting the work presents its own challenges, it’s often the most profitable and efficient solution. With a planned and properly managed process, subcontracting can provide the resources to meet your customers’ needs in an efficient and cost-effective manner. Ongoing communication with all parties is essential, of course, but the improved service you can offer your customers increases your value in their eyes.

The choice between performing all lab operations in-house or outsourcing some functions requires several interdependent decisions. Keeping the work under your roof means juggling schedules and available resources. In addition to personnel and equipment, efficiency and costs enter the picture. Outsourcing some of the tasks enables you to provide specialties beyond your scope without investing in--and periodically maintaining--seldom-used equipment or hiring and training personnel. But outsourcing does require an investment of time and research.

Once you decide to outsource, the specifics will depend on your customers and their needs. If a customer has only a few items, none of which your lab can handle, you can usually encourage the customer to deal directly with one of your qualified subcontractors. (Remember, though, that your reputation is affected by your recommendations.) If the customer has quite a few items, and only a few of them must be sent out, you might suggest handling them all.

All quality programs require that any subcontracted work meet or exceed the same standards under which you’re presently working. The final responsibility for meeting the standards still rests with you, but a good subcontractor can match those standards and expand the capabilities you offer your customers. As an example, our associates who deal mainly in electronics take advantage of our strengths in mechanical calibration and precision dimensional and form measurement. By outsourcing those items to us, they’re able to offer their customers additional services without incurring the costs.

As with all management duties, communication is the key to effective outsourcing. Your quality manual will spell out additional outsourcing requirements that require your compliance. Most ISO standards require that you disclose to the customer your intent to subcontract. In addition, the customer might have policies regarding subcontracting work, so a review of the purchase order or contract to clarify these issues is essential.

Always inform customers of your intent to subcontract before work starts so there are no surprises. At that time, you may want to give the customer the option of dealing directly with the subcontractor. Many will choose to have you take care of the arrangements because it’s more convenient and usually more cost effective for them to deal with one vendor.

Specialized gages are quite often given a comprehensive calibration only by the original manufacturer. Other test equipment might be beyond the scope of conventional services. The research and scheduling required to cope with these problems take time that a manager usually doesn’t have. In such cases a well-connected subcontractor can save a customer money.

Qualifying the subcontractor represents one of the largest time investments, but doing so is critical to the venture’s success. Lab accreditation and/or certification generally provide a good indication of the subcontractor’s abilities, but it’s by no means a guarantee. An effective, ongoing and open line of communication will be necessary when work is sent out. A visit to the subcontractor is also valuable and provides an opportunity to do an on-site audit. You should bring a checklist of what you’re looking for; check your quality manual, too, because it will most likely spell out subcontractor requirements. Click here for an example checklist.

Some areas to consider include:

The subcontractor’s quality program. This program is a critical area of concern, and a thorough review of it involves a significant amount of time. Is the company registered or compliant to the ISO or ANSI specifications your program requires? If you don’t already have a current copy of the company’s quality manual, request one immediately. It should cover all the major elements, including written procedures, records, storage and handling, and complaint programs. Reviewing this manual will tell you whether the company meets your program requirements. What do your associates or customers say about the company’s reputation?

Documentation the company sends with analyzed products. The documentation will show if your program requirements were addressed. A particular area of concern for anyone dealing with ISO, the Food and Drug Administration or military programs are the data reports about items received out of tolerance. This information is critical and must always be detailed on the certification. Inquire if the company offers additional services such as long-form certification showing all data and special requests such as specific data points. Additional costs might accompany these additional data requests.

Attach a cover sheet to the subcontractor’s certificate so customers can easily find all the standard information (i.e., manufacturer, model, serial number, etc.). This information should be located in the same areas as on your standard certification. During an audit, customers can find the information quickly. Click here for an examle cover sheet.

Environmental controls. If the subcontractor uses a circular chart recorder showing temperature and humidity, it’s a good indication of the company’s environmental controls. A quick glance will show the range and the fluctuation of the environment.

Communication procedures. From the receipt of equipment, to in-process updates, to the final billing--how does the subcontractor handle its communication flow? How long are records retained, and what information is available? This can be instrumental when a customer undergoes an audit.

Inspect the equipment. Equipment can be visually assessed as to its condition and status; look closely at the calibration label.

Evaluate personnel. Observe the way they perform their work and review their qualifications and written training records.

If the subcontractor is registered or accredited to any of the current programs--such as ISO 9002 or A2LA--it’s important to consider the area of accreditation. The company’s actual scope might be limited to a certain area such as electronic calibration, or to a single department or location. The company might offer other services, products or locations that aren’t included in their accreditation--which is common--but you’ll want to determine if this complies with the situation at hand.

For example, if a subcontractor is A2LA-certified, does that mean it’s qualified for your gage block calibration needs? A closer look at the scope of accreditation could show that the company is certified for other areas that don’t include dimensional gages.

The calibration (e.g., gage blocks, Fluke 5700 Calibrator, etc.) standards the subcontractor uses must be traceable and should maintain an accuracy greater than what’s being verified. Most programs require a minimum ratio of 4:1 (i.e., the accuracy of the standard is four times better than the unit under test). If the ratio is less than 4:1, find out how the subcontractor will notify you. Some programs require that labs report the ratio or measurement uncertainty on the certification.

The purpose of this ratio is to ensure that the error of the standards will have a minimum effect on the overall values reported. In some instances (such as when measuring gage blocks), achieving a 4:1 ratio will be very difficult, and the subcontractor should address the issue. This is a good item to ask about during the audit. Also inquire about the company’s intervals of calibration and what procedure it follows when its standards have been found to be out of tolerance.

One feature that separates better labs from the rest is their timeliness in contacting you regarding an issue. From your customer’s standpoint, you are ultimately responsible for how long it takes an item to be returned. How will the outsourced lab handle the situation when its standards are undergoing recertification? Will they call immediately or leave you waiting?

Unfortunately, my company experienced the latter situation with a major manufacturer that was registered to an ISO standard and also lab-accredited. We’d sent our primary gage block set to the original manufacturer for recertification. The company didn’t tell us it was shifting its metrology efforts to a Midwestern facility, which was undergoing its registration audit. New-facility problems followed, but we remained uninformed for more than a month. Our backlog grew at the same rate as our frustration. A simple phone call from them would have given us choices, but our phone messages remained unanswered. A new supplier was the final result.

Outsourcing costs are another area to consider. The initial fee is the most obvious, but it’s only one of many costs; shipping to and from the subcontractor should also be considered, as should the cost of coordination.

From a time standpoint, it’s more efficient to deal with a few select subcontractors. The time spent tracking items and obtaining status updates can skyrocket as the number of subcontractors increase.

From an efficiency standpoint, it’s important to anticipate a subcontractor’s need for manuals or equipment data on items that are specialized, from an uncommon manufacturer, or if limitations exist on how that equipment is used.

Along with the cost of determining the subcontractor’s initial qualification are the costs incurred during the necessary annual or periodic requalifications. Does the subcontractor have a list of what services it offers, or will you have to call the company each time? This process can be time-consuming and incur “soft” costs.

A cost-related benefit of outsourcing, however, is that reputable subcontractors will stand behind their work, should problems arise, thus eliminating in-house rework costs.

There is no doubt that subcontracting involves a good relationship and open communication with your customers. But when well-planned and -executed, it will provide extra value to your clients, meeting their needs in an efficient and cost-efficient and cost-effective manner and making you an invaluable resource.

About the author

Craig Howell is president of C.P.M. Labs (www.cpmlabs.com), which was formed in 1982 in response to a local need for a full-service calibration lab and ultra-precision measuring facility. Located in Rancho Cordova, California, the company’s philosophy and mission is to provide accurate, traceable service that is affordable.