Mastersourcing

A variation of the term outsourcing, Mastersourcing can be defined as the transfer of the development and production of highly-specialized, mission- and performance-critical, low-volume products and solutions to an external provider. The concept - a supplier that has reached a master level - evokes “master plumber” or similar: masterpiece, master’s degree, masterwork, and mastermind.
As the word outsourcing is used inconsistently and unfortunately often implies the modern notion of offshore/inexpensive/commodity services, many subsequent terms have been created to more tightly define certain aspects of outsourcing such as multisourcing, the use of multiple outsourcing providers in specific service areas; nearshoring, the outsourcing of services to a foreign, lower-wage country that is relatively close in geographical location or factors such as time zones, cultural influences, language, economical/political factors, etc.; right-sourcing , selecting the right resources to do a specific job, and one of the newest additions to the list, crowdsourcing, the process of outsourcing tasks traditionally performed by an employee or contractor to a large group of people or community, a “crowd.”
Mastersourcing was created to provide a more accurate term for businesses who focus on providing high quality, specialized services that are a critical element of highly complex finished products to separate these types of organizations from the often times commodity business of outsourcing.
What is Mastersourcing?
Beyond the scope of traditional outsourcing, mastersourcing also adds expertise. A mastersourcing provider is a skilled specialist, often a solution provider with a niche offering consisting of something that is not commercial or standard, with limited players in the market -- businesses that are truly masters of their trade whether it be engineering, design, manufacturing or a combination of the three.
A mastersourcing supplier works as an extension of the manufacturer’s own engineering team to provide a product and service that the company is used to seeing from an inside perspective in terms of elements such as design, test, build, etc. and delivers it as a completed product. A mastersourcing partner will typically have a mix of both engineering and manufacturing capabilities to handle this, effectively blending the capabilities of design house and contract manufacturer. In an industry such as information technology where this type of skilled expertise is needed, system integration is critical to the completed project as well, including testing of the design and finished product.
To summarize the concept, a mastersourcing partner stays focused on providing customized, specialized solutions and is not an on off-the-shelf supplier; the mastersourcing partner provides highly specialized engineering and manufacturing expertise and is essentially the glue between another organization’s ideas and the delivery of finished products. Therefore, if a business lacks an expertise in a certain area, or it is not germane to its core competency and therefore doesn’t make sense to pursue, an outside mastersourcing partner is contracted for that part of the project.
Why Mastersourcing?
Factors such as rapidly evolving technology, increased global competition, cost, time to market and the pursuit of new business opportunities have prompted many manufacturers to outsource a range of critical operations. Furthermore, the macroeconomic recession of 2008-2009 further increased cost pressures, and the need to remain competitive became a critical factor in maintaining business health.
As a result, many large manufacturers have been forced to lay off workers to stay lean. In terms of engineering skills, it does not make sense to lay off core technology engineers, but budgets can often be trimmed by cutting the mechanical/electrical engineers performing tasks not key to the organization’s core competency.
The problem is that even though these specific engineering tasks are not necessarily immediately relevant to the manufacturer’s core competency, it is still critical that the components formerly produced in-house be manufactured with the ultimate attention to detail and quality for incorporation in a high-quality finished product. Consider this example: while you may not see or think much about a car’s airbag, it is one of the critical elements that ensure the safe and reliable operation of the vehicle. Producing airbags is not the specialty of an automobile company, and to dedicate internal design and manufacturing resources to the production of airbags would likely delay time to market and ultimately increase cost. Instead, the automobile manufacturer outsources the production of the airbag to a highly-skilled third party whose entire business is focused on providing the safest and most effective airbags, and dedicates its internal resources to research and development, testing, etc., so that when the final car is delivered, this key safety feature is flawlessly integrated into the finished product and guaranteed to perform its potentially life-saving function when needed.
Another factor influencing the need for mastersourcing is the continuous trend toward industry consolidation. As large organizations merge, specialized skills often get lost or eliminated from the combined entities. The need for the products/services created by these skilled workers does not dissipate, however, so businesses need a reliable and effective mastersourcing provider to fill the gaps. In addition to knowledge gaps, many mastersourcing providers also fill critical capacity gaps to increase time to market and reduce costs.

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