Holy Grail of contract production – when to start cooperation with a subcontractor?
Over a century ago, Henry Ford had the idea to divide production into individual segments and maximize profits, speed and product quality. Both, the belt system production and wider approach to this idea, defined as the cooperation of principals with subcontractors can bring many benefits. However, at the very beginning the key question arises – which moment is the best to start cooperation with a subcontractor?
Without subcontractors, many projects either would not have been implemented at all or the process itself would take too long to be viable. Redirecting individual task elements to contractors enables optimizing costs related to employment, technical background or know-how. Subcontractors provide professional teams, modern technologies, system of operation tested in practice. The risk is divided into several entities with a common end goal. All this enables the product owner to redirect all his attention to the priorities and strategic goals of the company.
Transparent contract
Principles of cooperation between the client and subcontractors is not a matter that can be made in a hurry. The risk is taken by both parties – these are separate entities that in many cases did not have the opportunity to perform services for themselves. On the one hand, the client may have problems with financial solvency, on the other, the contractors may apply too low standards or approach tasks with too little professionalism. Without proper verification and preparation, both entities can see mutual obstacles only in the course of cooperation, which usually results in mutual losses. The basic protection is therefore a detailed contract that specifically presents the responsibility and scope of duties of both entities.
All legal regulations strive to increase the ordering’s party control over who really performs the order. Additional obligations are introduced not only to subcontractors, but also product owners. The limitation of responsible entities for production is the key issue. The point is that specific issues should be addressed only by those companies which business profile includes certain services. It is worth remembering that on the one hand, thanks to third parties that provide their employees with a step-by-step contract execution, contractors increase their entrepreneurial potential. However, real obligations are associated with this type of service.
Basic principles of cooperation
A few sentences about principals and subcontractors duties, important independently from the decision to cooperate with contract manufacturing.
The commitment issue on the client’s part is connected at most with detailed analysis of the areas that will pay off to subcontractors not only in costs reduction, but the company’s development in general. The first step is to define the main company’s functions and its strategic goals. They, together with the company’s mission, will build its position and show the future value, hence the principle of leaving them in entrepreneurs’ hands. It is best to give subcontractors all necessary activities, but not those belonging to the company’s priorities. Additional activities usually include issues related to accounting, additional staff training, IT administration or more and more important – cooperation with contractors. In growing competitiveness reality, where technological progress has enabled the creation of excellent products for companies with less capital, customer service has become the key distinguishing feature.
Subcontractors in turn base their cooperation on two premises – business profile and estimation of real company’s abilities. Statistically, the first is most often neglected issue. It is said to accept only those orders that perfectly fit into the type of provided services. This allows to maximize quality and reduce the time necessary to implement a given contract. The second premise is widely known as cut the coat according to the cloth – thanks to the awareness of our capabilities, we reduce problems related to basic matters such as finishing on time and comprehensive compliance with contracts.
A simple rule – “the sooner, the better”
Regardless of the decision and the chosen moment, starting cooperation with subcontractor will always require strong commitment of both parties, documentation preparation, taking into account the entire theoretical and practical context. However, it is worth remembering that “the earlier, the better” rule also works in this case. Thanks to the thoughtful, but at the same time efficient decision making, both sides gain time to control the risk. Lack of hurry on the subcontractor’s part means lower implementation costs on the client’s part. Everything is based on the fact that the contractor gets a chance for substantive preparation and professional performance and the product owner can fully focus on developing sales and marketing by maximizing all profit indicators.
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