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In light of recent revelations of the inherent dangers of manufacturing toys in low cost foreign locations, the South West Manufacturing Advisory Service (MAS) has launched a toolkit to help Wiltshire businesses identify the threats and opportunities of off shoring.
As more than a quarter of manufacturing projects that are relocated to low cost foreign locations fail, the MAS, in partnership with The Manufacturing Foundation, commissioned KMPG to produce the “Offshore? Be sure!” support tool, which provides practical and constructive guidance for manufacturers considering off shoring. The guide focuses on India and China as two of the world’s most influential and developing economies.
Arthur Richardson, director of the South West MAS, said: “A total of 25 per cent of off shoring projects fail - this is usually as a result of a lack of appropriate information and inferior consideration, which has led to costly decisions being made in industry. Cheaper labour rates may make off shoring an attractive option but it is not the only factor – there is much more to consider.
“The decision to look offshore for opportunities to maintain competitiveness is complex. This tool has been devised to help companies pay due consideration to the total acquisition cost, the inherent supply risks and the potential impact on the remainder of the business of off shoring.”
The offshore decision-making toolkit comprises two books - a workbook and a resource book providing background information, statistics and guidance. The toolkit is delivered by trained MAS specialists who will provide expert assistance to guide companies through the various sections.
The toolkit also includes a “calculator”, whereby the company concerned can use a detailed spreadsheet that allows them to enter all their current figures, then calculate the estimated total cost of off shoring.
Arthur added: “Off shoring is continuing to pick up speed: the reasons for this are market consolidation, attractive growth markets in Eastern Europe and Asia as well as cost pressures. However, the success of off shoring is entirely dependent on a clear strategy and a decision making process that takes into account the whole value chain and not just wage costs.
“There are great opportunities presented by off shoring projects, but threats must also be considered and companies need to recognise that there is no ‘one-size-fits-all’ solution. This is where the toolkit and our specialists can add real value.”
If you would like to find out more about ‘Off Shore? Be Sure!’, please contact the South West MAS helpline on 0845 608 3838.
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