Production outsourcing for a transnational company: 400 specialists on site

A transnational company — a manufacturer of hygiene products, cleaning agents, and detergents — approached us with a task requiring high flexibility and rapid response. 

The client had two locations in Russia — in the Central and Northwestern Federal Districts — and both were experiencing similar issues: sharp fluctuations in production volumes and a shortage of labor during peak seasons. The in-house personnel management system was unable to cope with the workload. 

A partner was needed who could take responsibility for production cycles, in-plant logistics, and finished product shipment.

We began by fully supplying the enterprise with "blue-collar" workers: 

• packers

• order pickers

• loaders

• forklift drivers

• line operators and shipping administrators

After a successful launch and process stabilization, the client entrusted us with key operational management positions — team leaders, shift supervisors, HSE and quality engineers, and instructors.

Context and Objectives

The client's primary request was to ensure flexibility and consistent quality amid changing production volumes, as well as long-term cost optimization. The company imposed strict requirements: compliance with corporate standards for quality, occupational health and safety, anti-corruption policy, and data protection.

Project Implementation

1. Project Start (2003):
The client requested the provision and administration of 400 employees — packers, order pickers, and forklift drivers. We developed an action plan and transferred the personnel to our company's payroll in a single day, ensuring uninterrupted shift operations.

2. Transition from Outstaffing to Operational Management:
Initially, the project was built on a classic outstaffing model, but after a successful launch and process stabilization, the client transferred the full operational scope to us — from production workers to shift supervisors and quality engineers.

3. Change in Pricing Model (2008):
Instead of payment based on an hourly rate, we switched to a calculation based on per-unit of produced output. This ensured cost transparency for the client and increased labor productivity manageability.

4. Integration into the Client's System:
All employees worked within the client's IT systems, underwent training, and had their own user accounts. Our on-site coordinators, HSE engineers, and quality specialists were present at the location — they became an integral part of the production team.

5. Organization of Control and Communications:
SLAs with clear KPIs for productivity, timelines, quality, and safety were developed and signed for the project.
Interaction was built on regular operational meetings (daily and weekly), quarterly business reviews, and constant exchange of reports.

6. Use of Client Tools:
Work was conducted within the client's systems. The only exceptions were our internal tools for HR administration, accounting reporting, and financial control.

7. Flexibility and Adaptation:
Action plans were drawn up for the short-, medium-, and long-term and were adjusted online depending on seasonal or situational changes in production or shipment volumes. Each adjustment was discussed with the client and approved jointly.

Quality and Risk Management

In collaboration with the client, we annually updated the Business Continuity Plan, which described all possible risks — from supply chain disruptions to fluctuations in project headcount — and measures for their mitigation. The agreed-upon communication matrix ensured rapid escalation in case of issues.

Quality control was conducted systematically: quarterly reconciliations on the achievement of Key Performance Indicators (KPIs), regular satisfaction surveys from the client and personnel. Bonuses were provided for continuous KPI fulfillment over three months, while penalties were stipulated for violations.

Evolution of the Model

In 2015, we tested several alternative approaches. First, the use of personnel rotation between workshops helped reduce staff turnover. Then, cooperation with local recruitment agencies for the prompt engagement of subcontractors.

By 2020, a review of contractual terms and the pricing model was conducted. This allowed for increased operational efficiency and a significant reduction in the client's budget.

Results

By the second year of cooperation, the client experienced noticeable improvements. All KPIs were consistently met: timely loading and shipping, zero occupational safety incidents, 100% completion of training sessions, and a minimal percentage of defects and documentation errors.

As a result of the project, we managed to:

• reduce costs by an average of 30-40% within the outsourced scope;

• ensure an increase in process flexibility and predictability of up to 30%;

• ensure full transparency of the operational budget;

• reduce expenses on major budget items by 15%.

Conclusions and Insights

The transfer of non-core functions to outsourcing freed up the client's management resources, allowing the team to focus on strategic development and market expansion.

The key takeaway for our team: trust, openness, and delegation form the foundation of productive cooperation. When a partner is engaged and trusted, they are capable of not just performing tasks but improving the process itself.

Experience has shown that competent functional outsourcing is not about saving for the sake of saving. It is about sustainability, flexibility, and strategic synergy.