“You can’t have your cake and eat it.” Myth or reality?
Back to manufacturing. Don’t we often hear….?
Myth: “We can only remain competitive if we produce in lower cost countries, especially with a weaker £ pushing up import costs.”
Reality: Lower costs overseas can be more than off-set by higher less quantifiable costs.
Risk: Cost of inventory in transit; lower value of Sterling raising prices; unnecessary/obsolete inventory driven by exploding forecast inaccuracies – the longer the time horizon the more inaccurate becomes the forecast against which orders were placed, meaning when you get what you ordered and paid for it’s not always what you need now while what you need now is perhaps still on order; hidden costs of non-conformity against specification/quality; over shipment and/or delays due to local inefficiencies and minimum shipping quantities, e.g. waiting for or shipping a full container-load, etc.
Proposition: Reduce lead times and reduce costs by sourcing locally and/or producing in house in a while regaining better control of the supply chain. See blog on Re-shoring