5 ms·

Outsourced Profits – The Cornerstone of Succesful Subcontracting [pdf]

48 points by montalbano 7y ago

yodon 7y ago
> The history of the former Douglas Aircraft Company is cited as a clear indication of what these policies have done – and as a warning of what more may be done. The subcontractors on the DC-10 made all of the profits; the prime manufacturer absorbed all of the over-runs.
LordOfWolves 7y ago
A "quick take" from another post on HN regarding this document [1]: "It offers a detailed look at Douglas Aircraft and their doomed attempt to boost profits via outsourcing. Those familiar with the commercial aviation business know that Boeing's "purchase" of McDonnell-Douglas resulted in wholesale importation of Douglas's accounting wizardry to what had been a largely engineering- and safety-driven corporate culture. Relevance to the MAX fiasco and the tardiness of Boeing's NMA designs is left as an exercise to the reader…" [1]: https://www.hackernewspapers.com/2019/809-boeing-out-sourced-profits-the-cornerstone-of-successful-subcontracting/ https://www.hackernewspapers.com/2019/809-boeing-out-sourced...
- montalbano 7y ago
  That looks like an interesting website, is it completely separate or is it a kind of comment aggregator?
  - LordOfWolves 7y ago
    According to its homepage, the website is not affiliated with YC but serves as an aggregator of top articles from HN (updated weekly). It looks like the site itself was submitted to HN three times by user "cloudjk", with its second submission seeing the most popularity: https://news.ycombinator.com/item?id=19626404 https://news.ycombinator.com/item?id=19626404.
Neil44 7y ago
Is it possible to outsource poorly and loose money on a project? Yes of course, especially if you're making decisions based on cargo cult dogma or company politics.
asdfman123 7y ago
Can someone who has read this carefully summarize its main points?
- extrapickles 7y ago
  * Be careful to compute the actual cost of outsourcing (eg: include transportation costs, added time to write specifications, rework, etc). This is particularly hard to do accurately. * Having some in-house production people help keep vendors from bamboozling on costs. * Retain enough production in house to have enough cash flow to develop V2 * Out-source for better facilities (eg: they have higher precision machines than what you can afford), not that they are lower cost (eg: they pay their employees $2/day) * It can make it harder to optimize the entire product

48 points by montalbano 7y ago

> The history of the former Douglas Aircraft Company is cited as a clear indication of what these policies have done – and as a warning of what more may be done. The subcontractors on the DC-10 made all of the profits; the prime manufacturer absorbed all of the over-runs.

LordOfWolves 7y ago

A "quick take" from another post on HN regarding this document [1]: "It offers a detailed look at Douglas Aircraft and their doomed attempt to boost profits via outsourcing. Those familiar with the commercial aviation business know that Boeing's "purchase" of McDonnell-Douglas resulted in wholesale importation of Douglas's accounting wizardry to what had been a largely engineering- and safety-driven corporate culture. Relevance to the MAX fiasco and the tardiness of Boeing's NMA designs is left as an exercise to the reader…" [1]: https://www.hackernewspapers.com/2019/809-boeing-out-sourced-profits-the-cornerstone-of-successful-subcontracting/ https://www.hackernewspapers.com/2019/809-boeing-out-sourced...

montalbano 7y ago
That looks like an interesting website, is it completely separate or is it a kind of comment aggregator?
- LordOfWolves 7y ago
  According to its homepage, the website is not affiliated with YC but serves as an aggregator of top articles from HN (updated weekly). It looks like the site itself was submitted to HN three times by user "cloudjk", with its second submission seeing the most popularity: https://news.ycombinator.com/item?id=19626404 https://news.ycombinator.com/item?id=19626404.

Neil44 7y ago

Is it possible to outsource poorly and loose money on a project? Yes of course, especially if you're making decisions based on cargo cult dogma or company politics.

asdfman123 7y ago

Can someone who has read this carefully summarize its main points?

extrapickles 7y ago
* Be careful to compute the actual cost of outsourcing (eg: include transportation costs, added time to write specifications, rework, etc). This is particularly hard to do accurately. * Having some in-house production people help keep vendors from bamboozling on costs. * Retain enough production in house to have enough cash flow to develop V2 * Out-source for better facilities (eg: they have higher precision machines than what you can afford), not that they are lower cost (eg: they pay their employees $2/day) * It can make it harder to optimize the entire product