Can re-shoring really cut costs?

ES Sept15 Pg28 & 29 JJS 4EMS provider, JJS Manufacturing, asks whether it is really possible to re-shore your manufacturing back to the UK, yet still remain competitive on price.

One in six UK original equipment manufacturers (OEMs) have re-shored elements of their manufacturing back to the UK in the last three years, according to an EEF survey. The main reasons cited were to improve product quality, reduce delivery times and increase certainty of supply.

These are all interesting points—particularly when unit cost reduction is often the driving force behind offshoring in the first place.

Clearly unit cost will always be an important factor, 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? Is it possible to re-shore manufacturing back to the UK, yet still remain competitive on price? Perhaps a UK EMS provider with a low cost region manufacturing facility could provide the best of both worlds.

A logical choice

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. Re-shoring production back to the UK will also avoid the language, time, political, legislative and financial barriers associated with offshoring.

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 your engineering team may benefit from being able to drive to the manufacturing plant.

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 and when key negotiations are required, you will be thankful to avoid a ten hour flight to meet with your EMS supplier. Having direct access to the plant and people responsible for managing and assembling your product are often important factors when considering the best outsourcing partner.

Increased visibility

A continued concern for those outsourcing complex electronic or electro-mechanical products offshore is intellectual property (IP) theft. Unfortunately, this can be a real threat and while Beijing seeks to reassure that China has a genuine interest in protecting IP, the UK continues to be regarded as a safe and quality location for manufacturing.

Thanks to improved transparency, identifying and controlling all 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

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 the challenges of moving away from the UK?

One option is to partner with a UK-owned EMS supplier that has established its own manufacturing facility in a low cost region. Such suppliers work to maintain best practice and consistency by 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—iability and responsibility remains firmly with the UK-based company.

This means customers 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.