Posted on 16 Jul, 2015 by Neil Sharp
In a 2014 survey carried out by the EEF, one in six UK original equipment manufacturers (OEMs) had reportedly re-shored elements of their manufacturing back to the UK in the last three years. The main reasons cited were to improve product quality, reduce delivery times and increase certainty of supply.
These are all very interesting points - particularly when unit cost reduction is often the driving force behind offshoring decisions in the first place. Perhaps you do get what you pay for after all?
Clearly unit cost will always be an important factor for OEMs. However, more and more UK OEMs are looking to capitalise on working with electronics manufacturing services (EMS) partners that are geographically closer. They are re-shoring their operations back home in a bid to reduce physical and psychological distance, while claiming back some control in the process.
But is this strategy the best solution for your company? Is it possible to re-shore your manufacturing back to the UK, yet still remain competitive on price?
In this blog post we will explore some of the benefits UK manufacturing has to offer, while considering if partnering with a UK EMS provider with a low cost region manufacturing facility could provide you with the best of both worlds.
1. Lower logistical costs
If your market is in the UK then reducing the geographical gap between end user and manufacturing plant means distribution time and costs will be considerably cut. Air freight can obviously help reduce lead-times, but comes at a premium, and while sea freight is much cheaper, expect to add between 6-8 weeks to your delivery times.
2. No barriers
By re-shoring production back to the UK you’ll avoid the language, time, political, legislative and financial barriers often associated with offshoring.
3. Enhanced control
Maintaining close and meaningful connections with your assembly partner during critical times like new product introduction (NPI) can help overcome design, build and test issues early. If you regularly upgrade or launch new products into the marketplace your engineering team may feel it’s important to be able to drive just a few hours to reach the manufacturing plant.
4. Closer relationships
Although convenient when working with Far Eastern suppliers, it’s unlikely you will build up the same level of relationship via video conferencing as you will with regular face to face meetings held in the same country. Having direct access to the plant and people responsible for managing and assembling your product are often very important factors for OEMs when considering the best outsourcing partner.
5. Responsive service
The prospect of a ten hour flight when key negotiations are required is something you'll want to avoid. It's when you need your EMS supplier to be the most responsive that you'll be thankful their manufacturing facility is considerably nearer.
6. Increased security
A continued concern for those outsourcing complex electronic or electro-mechanical products offshore is intellectual property (IP) theft. Unfortunately, this has been proven to be a real threat and while Beijing seeks to reassure others that China has a genuine interest in protecting IP, the UK continues to be regarded around the world as a safe and quality location for manufacturing.
7. Better visibility
Thanks to improved transparency, identifying and controlling all of the costs associated with manufacturing is easier when working with a UK assembly provider. Unfortunately, some of the additional expense associated with overseas supply, like the extra travel, shipping or management time if things go wrong, are not always allocated back to the total cost of producing the goods.
These are just some of the reasons it can be beneficial to have a relationship with a UK-based EMS partner. The issues around travel, language and IP are obviously heightened when it comes to Far East supply; however, partnering closer to home in Central and Eastern European (CEE) regions, such as Romania, the Czech Republic and Poland, can still come with challenges.
Best of both worlds
So is there a safer "middle ground" solution out there? One that helps you capitalise on the cost savings associated with offshoring, but without having to overcome some of the challenges of moving too far away from the UK?
Well, one option you may want to consider is partnering with a UK-owned EMS supplier that has established their own low cost region manufacturing facility. According to the UK EMS Industry 2013-2018 report, published by Reed Electronics, there are currently only four UK-owned companies that have established their own low cost facility, with plants situated in Romania, China, the Philippines, Slovakia and the Czech Republic.
Such suppliers are able to maintain best practice and consistency through controlling the processes from the UK. And unlike EMS providers who simply partner with low cost plants - essentially outsourcing the manufacturing again to a third party - liability and responsibility remains firmly with the UK-based company you are dealing with.
This means you get the best of both worlds – the cost benefits of offshoring but with the security and reassurance that the company you are dealing with is in full control and immediately accessible to you and your team.
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