Outsourcing your evil deeds

Last week I wrote about the peculiar fact that multinational corporations seem able to avoid unwelcome regulation, at least in certain cases, by the expedient of quitting the country to go elsewhere. This approach is admittedly a bit extreme, so today I want to talk briefly about another—much more common—way that some companies try to get around rules that forbid them to do Bad Things: hire a scoundrel as an external supplier to do the Bad Thing for you. That way your hands are clean … well, more or less … and dealing with the regulators becomes his problem.

This approach has become so common in international trade that it almost passes without comment. If your company makes widgets, and if you are regularly undersold by competitors because wages in your country are so high or environmental regulations add extra costs, someone is sure to suggest that you relocate your factories to another country where neither of these considerations is in play. Alternatively you can outsource the actual manufacturing to a supplier in the other country. That way you aren't paying the low wages, and you aren't causing the adverse environmental effects; but you still get your widgets a lot cheaper than before.

Of course, any such gains are temporary. If you can save money by moving your manufacturing to Ruritania, so can your competitors. Then some other country comes into view, with even lower wages and even worse environmental protections, and everyone moves there instead. Soon countries are competing against each other in a "race to the bottom." As I have discussed in an earlier post, in the long run nobody wins such a race. But in the short run, some companies find it compelling; and after all, "In the long run we are all dead."*  

I assume that the same dynamic probably operates domestically as well. That is to say, I have no personal knowledge of any domestic companies who exist so that their clients can skirt inconvenient legal or ethical constraints, but it wouldn't surprise me. Some people don't mind sketchy work, and some people will do anything for a price. 

The good news is that ISO 9001 explicitly disallows this! Clause 8.4.2(a) of ISO 9001:2015 states clearly that:

The organization shall ensure that externally provided processes remain within the control of its quality management system; …. 

So if you design and sell a product, but you outsource its manufacture to someone else, you are still responsible for what they do.

Most of the time, this responsibility is for very practical reasons. Maybe you do much of your own manufacturing, but there's one specific process that you outsource. Well if you require that all your manufacturing equipment must be calibrated to a specific tolerance, don't you want to flow down that same requirement to the supplier who is executing this one special process? If you don't, their uncalibrated equipment might ruin all the exactitude you achieved with your carefully-calibrated equipment, and you'll have to scrap the whole lot. Nine times out of ten, or 99 times out of 100, this is the kind of "control" that really matters. Mostly ISO isn't afraid that you are going to try to do Bad Things in an underhanded way, because most people just don't do that. But ISO is concerned that when your process is executed, you get what you want.

To be clear, this clause does not mean that you have to know your supplier's business better than they do. It does not mean that you have to define the details of their operating procedures. The whole reason you are hiring them should be that they are experts in whatever you want them to do. 

Nor does it mean that if your company has to be certified to AS9100 because you are building aerospace parts, then the caterer that you hire to provide lunch has to be certified to AS9100 as well. (I hope that's obvious.)

But if you have any overall constraints that apply to all of the work inside your QMS—like the calibration example I just gave—then (where it is relevant and meaningful) you have to flow down those requirements to your supplier.

And if you happen to be the one case in 1000 who wants to get away with a Bad Thing by hiring a scoundrel to do it for you, … don't. Just don't.  

__________

* John Maynard Keynes, A Tract on Monetary Reform, 1923. Quoted many places around the Internet, for example here.