MAS advises on offshoring

The Manufacturing Advisory Service South East has issued advice to manufacturers on sending manufacturing offshore to low cost regions

In the light of recent product recalls from China, the Manufacturing Advisory Service South East has issued advice to manufacturers on sending manufacturing offshore to low cost regions.

According to David Caddle, Head of the South East Manufacturing Advisory Service, the Mattel experience will cause many businesses to review the way they manage their manufacturing offshore, and perhaps even question its viability.

Caddle said: ‘Business isn’t just about keeping costs low. Quality issues can have a dramatic impact on reputation, and if companies aren’t rigorous in the way they manage and monitor production, particularly when it’s at “arm’s length”, then they are running enormous risks.

‘We have to accept that the UK can’t compete on certain manufactured goods, particularly lower value units, but cost is only one small element to consider. Businesses moving production offshore need to take account of the longer lead times, lack of day-to-day control and the need to manage stock level far more effectively.

‘Managers should ask themselves what impact offshore manufacture will have on their customers. How do you respond to those requests for urgent orders when production is thousands of miles away; how do you monitor quality and ensure that products meet UK legislative requirements and not just those of the producer country?

‘It can also be very difficult to tell good suppliers from poor suppliers, or indeed to know whether your goods are being manufactured by that supplier or contracted out.

‘It’s also very easy for UK companies to over-estimate the size of the business opportunity and to put all their eggs in one basket, when what’s really required is an approach that develops a business relationship over time.

‘Many UK companies have moved production to low-cost regions but quite a few have decided that the pitfalls, over issues such as quality and lead times, actually outweigh the benefits and are now moving manufacturing back to the UK.’

Caddle’s ‘don’ts’ of offshoring are: don’t rush all production into a low cost region. Don’t make assumptions – specify every detail for components and raw materials – and don’t ignore the risks of arm’s length production. Don’t expect world-class delivery or try to manage relationships remotely – you need to visit frequently

His ‘dos’ include: do weigh up the total cost of acquisition, not just the obvious costs. Keep all documentation in good order and take a structured approach to developing relationships. Visit regularly and conduct formal audits of quality and performance.