Folks used to ask us how we continued to get top awards for quality when we outsourced production, didn’t own a vineyard, and had no winery! We would reply “You can outsource everything but Sales, Accounting, and Quality Control.” Yes, you can even outsource Production, but be sure to keep Quality Control in house. Here are 5 benefits:
Pay as You Go. Many businesses fail because they get in over their heads with large offices, warehouses, equipment, salaries, and other commitments that cry out for big monthly overhead payments, whether or not sales are being made. We couldn’t afford bricks and mortar, thus we relied on outsourced services and supplies. This turned out to be fortunate for us, as it allowed us to focus on sales and distribution.
He Who Writes, Wins! Like so many startups, we were undercapitalized and had to outsource as much as we could. But we quickly found out that we had to stay on top of Quality Control in every way possible. Our contractors used terms like, “Production will be executed in accordance with standard industry practices.” You’d think they’d have this stuff written down somewhere. We asked for a manual of “standard industry practices” and never got one. As long as it was not written down, we couldn’t very well hold them to a specified performance standard. So, we wrote down what we wanted. It included details on temperature, SO2, CO2, fill heights, PH, residual sugar, and a myriad of other factors important to the wine industry. By specifying the details in writing, our outsourced contractors were compelled to comply in order to get the contract, and to get paid.
Police It! We learned pretty quickly that we had to have a person on our payroll on the production line on the day when our products were being produced. Our person had the power to stop the production at any time our vendor was not meeting our quality standards. This was a very expensive proposition for the vendor who was paying for their crew whether or not they were running our order. Thus, fixes were fast.
Improve Your Contracts. We also got a big lesson in writing outsourced services contracts. When we started, our contracts were only 3 pages long. By the time we sold our business, our contracts were over 30 pages long. That’s a result of how many times our contracted services providers got over on us. Time and again we had to write new clauses, new addendums, new check lists, and new sign off sheets. We had to specify quality and more tightly describe what we would accept and pay for, and what we would not.
Improve Your Quality. But we also learned another lesson which we wish we had known from the beginning, a lesson we adhered to during the entire life of our business. Outsourced production could actually be better than in-house production. With in-house production, you are tempted, and sometimes financially pressured, to put less than perfect products on the market. So now you are hurting your brand to recoup your investment. On the other hand, when you outsource for services and supplies, with detailed quality control standards, you don’t have to accept, or pay for, goods you don’t approve. So you are actually in a better position to ensure consistent quality for your customer.
Quality Control is a journey, not a destination. You are always learning something new. But it is the key to survival for most startups that choose not to take production in house. It can also be the key to providing your customer with dependable quality that builds your brand. Your customers deserve the best, and you are better able to supply that with in-house Quality Control.
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.
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