Offshore manufacturing: Ending apathy is the only solution

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The offshore outsourcing question has been looming over the heads of the British manufacturing fraternity for some time, but morale has never been so low. Manufacturers seem to be accepting what they see as a fated doom, without considering the options for reducing costs in other ways.

Offshore manufacturing is only one choicenot an inevitable step. Its most-quoted explanation is cost. Taking cost alone (the potential impact on customer service and reputation being another matter altogether), potential reported savings range from 25 to 50-plus per cent. Impressive these may be, but there is still no reason to jump aboard the slow boat to China without first looking at existing processes.

Implement a lean approach
Given that upwards of 70 per cent of the average business or manufacturing processes consist of non-value-added activities and are therefore pure cost, the potential to match these savings on UK shores undeniably exists. Often talked about but seldom implemented, a lean manufacturingor should we say a lean enterprisestrategy is an obvious solution. If, by adopting lean, the average business is able to reduce its non-value-added activities to just 10 per cent, it could reduce costs by some 43 per cent and cycle times by 63 per cent. Yet, aside from some posturing among the bigger boys, few companies are taking advantage of these possibilities.

Whether we build our own factories in China or Eastern Europe as some are doing, or outsource the manufacture of our products doesnt matter as usually all we are doing is translating the same bad, inefficient processes to another location. Yes, the labour costs are less but what advantage does the customer receive if all we are providing is same old, same old?

Face up to your future
The most worrying faction within the industry consists of those businesses that are not sending their work offshore and are not adopting lean or any other change strategy. These companies are failing to face up to the future. A gentleman attending a recent seminar on offshore manufacturing askedor rather made a statement about his 6 million businessthat as a supplier to a major auto manufacturer, he is under enormous pressure from said car company to reduce costs and improve productivity. Yet this gentleman believed that his business was too small to change the way it operated and that new technology enabling productivity improvements was too costly an investment.

In the ensuing discussion he was asked, given what happened to the corner shop over the last two decades with the dominance of the major retailers (Tesco, Sainsbury, Asda, etc), what did he think was going to happen in the long term? His response was I think we wont exist and yet he still didnt see how he could, or should, change. For him, doing nothing will result in exactly that: nothing. This attitude, which he is not alone in holding, will sound the death knell for the small enterprise in the UK and probably in the rest of the western world.

Call to action
Conversations such as these are frustrating and not a little sad for those within the industry who see it unnecessarily folding to an inevitability that simply does not have to exist. There simply has to be a call to action for industry as a whole: while 57 per cent of executives in a recent survey may have said lean is critical to how many of these are actually doing anything about it?

Lean is not just about cost savings, its about creating a flexible, agile and responsive environment, within which businesses can gain competitive advantage by servicing customers better; faster; at lower cost and with higher profits.

It is only through a collective effort that modern manufacturing can avoid the fate of everything else the British invented, from football and cricket to rugby and the industrial revolution: becoming one of Britains greatest exported ideas.

Chris Astall is Product Director, Demand-Driven Manufacturing Strategies at Cincom Systems, with a primary responsibility towards solutions that meet the needs of the "lean manufacturer." Chris has been with Cincom since 1990 and moved to Cincinnati in 1999 from the UK. Prior to joining Cincom, Chris was Materials Manager for Tektronix Inc. and Project Manager for the UK's first Class A MRPII certification by the Ollie Wight Company.

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