Offshoring has been a popular choice with manufacturers for years, but times are changing.
Whether you already have some operations based overseas or are considering where to place your business, let’s explore a few reasons why onshoring could be the best option for your company.
It’s often cheaper than offshoring
We’ll start with something that might surprise you: offshoring all or some of your operations will not save you as much money as you might expect.
Overseas labour costs are on the rise – in fact, an FT Report a few years back showed that China’s wage level tripled between 2005 and 2016. In addition, we’ve seen many fall into the trap of looking at piece part price, as opposed to the “lowest landed cost”. It’s a cliché, but it all really does add up.
Think transit costs. Support costs. Travel and expenses for any staff who need to visit suppliers. Costs for auditing suppliers, or the cost involved with someone – whether the supplier or one of your staff members – being available for out-of-hours communication. Time differences aren’t impossible to work around in supply chain management by any means, but they can be expensive.
It’s more convenient
Working in different time zones can bring other complications too. If there’s an issue that needs to be solved quickly, you may be waiting longer than ideal for a response from your offshore partner. And there may be language barriers along the way.
Onshoring gives you more control when it comes to managing your supply chain. You can visit suppliers spontaneously and keep a closer eye on quality.
Constantly evolving world politics, trade and economies also have an impact on overseas productivity and cost.
Onshoring can cut delivery time by weeks, which could secure you more customers in the long-term. Offshoring often means opting for sea freight. This is a popular choice, as it minimises transit costs. But, it takes a long time, leaving you with large gaps between dispatch and arrival. It’s not just the wait itself that’s the issue here, but the fact that high levels of inventory can’t be accessed for the duration. This is turn makes forecasting difficult.
When your inventory is quite literally out at sea, you lose a certain element of control over it. This can be particularly difficult in the early life stages of a product, when processes aren’t yet fully stable.
There’s less risk involved
COVID-19 has also thrown many a spanner into the logistics
of manufacturing. There are ways to manage this kind of risk, but while things remain so uncertain, freight costs and times will keep fluctuating. This means that when offshoring, it’s hard to stick to a schedule with confidence.
Exposing the ins and outs of your engineering processes to overseas supply chain partners is risky too. If you don’t have patent or IP rights in those countries, you could find your product being copied. Keeping everything onshore lessens the risk of IP theft.
It’s ok to embrace local
Working with partners closer to home makes for ease-of-business, and smooth product launches. There are no conflicting time zones, it’s easy to flex when needed, and making big changes at short notice is no big deal. All of this is vital for any company, but is chiefly important for start-ups who are still establishing their manufacturing processes. Ultimately, onshoring lets you take charge on your own terms.
Many consumers also prefer buying products made in their own country. Working with local partners supports the economy, and lets businesses take pride in producing quality, British-made products.
The CB Technology Business Customer team hold in-depth workshops to fully understand requirements before a project begins. Then, throughout any engagement, we hold regular meetings to make sure tasks are completed on-time by both ourselves and you – the customer. To put it bluntly, we truly believe that this kind of efficiency is hard to achieve with an offshore partner.