So, your company has decided to outsource. You’ll need a team of folks to help manage this venture. Enter the program manager. (See, also: “When outsourcing is not the answer“)
Program management responsibilities inside the contract manufacturer can vary based on the type of products going into production and the industry in which manufacturing takes place.
Below are some general guidelines to help define some of the responsibilities of program management as a functional group within the contract manufacturer and, what makes a good program manager while interacting with the OEM customer.
Program management responsibilities within a contract manufacturer can be divided into internal efforts and external efforts.
Internal effort
Program management internal responsibilities make up roughly 70% of the program manager’s time — working and resolving OEM customer outsourcing program issues via facilitation with functional groups within the contract manufacturing facility.
External effort
Program management external responsibilities account for the remaining amount of the program manager’s time — understanding the OEM customer’s program needs and managing OEM customer’s perceptions and satisfaction.
The internal aspect of program management is commercial in nature and involves:
- profit and loss statements
- balance sheets
- cash flow statements
The external aspect of program management is focused on the OEM customer and primarily involves execution management and addressing some of the customer’s key questions:
- ‘What’ am I getting?
- ‘When’ am I getting it?
- ‘How much’ am I paying for it?
Effective vs. efficient program management
Program managers that do ‘everything’ may be efficient. However, an effective program manager does the ‘right’ things. (If the program manager is not doing what is important…it does not matter how efficient the program manager is)
Single point of contact
In most instances, all OEM outsourcing program information flow from the customer destined for the contract manufacturer should pass through contract manufacturing program management. Equally, all contract manufacturing information destined for the customer should pass through program management.
Program management is the only functional department that is allowed to commit to the customer. In short, program management’s role is to transform the OEM customer’s vision into an executable plan.
Program management responsibilities
While there are many other program management responsibilities, a few of these responsibilities include:
- Tracking changes in customer end-user demand volumes against contract manufacturer’s capabilities
- Forecast management
Program managers help ensure any unusually ‘increased’ customer product demand quantities are billed-to, and collected-on, by the contract manufacturer (terms are usually agree on in advance and spelled out in the contract service agreement)
- Backlog management (program managers must ask questions)
- How large is the OEM customer’s production backlog?
- Why is the backlog there?
- How long will it take to build out?
- How much backlog does the customer want the contract manufacturer to hold indefinitely?
- Shipping management
Program management must determine any reasons for production manufacturing shortfalls in quantity committed by month vs. production quantities actually shipped
- Are there OEM customer issues?
- What are the contract manufacturer’s internal issues?
Edweed
Posted at 9:03 am on March 9, 2011
Generally an accurate summary from a Contract Manufacturer (CM) perspective and I think your insights are useful for those unfamiliar with how a CM operates.
The difference between an effective PM and an ineffective PM from an OEM’s perspective is very basic – does the PM have P&L decision making authority and senior management horsepower to pursuade top level management at the CM to service the OEM customer effectively? PMs generally work excessive hours, have no final decision making authority and rarely add value to the OEM due to constant juggling of a broad range of issues; none of which they (the PM) typically carry any expertise.
The PM role at a Contract Manufacturer could be the key to business growth with any CM; unfortunately, they are not equipped to succeed and most experienced OEMs understand the role is nothing more than a roadblock and gatekeeper to secure the CM’s top priotity; their own profits.
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Silicon Valley | North America
Posted at 6:07 am on April 16, 2009
Nandkishor,
Thanks for your comment. The article was written from a general perspective based both on experience and talking with others in industry.
The article serves its objective of highlighting general and, some key, areas of responsibility and challenges for program managers (PM) wanting to gain a deeper understanding of electronics outsourcing PM; situations they’ll likely encounter, and areas they may (should?) want to dedicate specific attention to.
PM responsibilities and knowledge requirements within contract manufacturers vary based on the type of product / industry.
The article would perhaps be structured differently, if it were written for a specific industry or product program.
Mark
Nandkishor
Posted at 9:39 pm on April 15, 2009
Why can not the responsibilities / activities be listed like 1,2,3 etc? Reader can not understand a single responsibility exactly. Zero user experience article. sorry, but this is what I think.