Outsourcing can take the risk out of the productivity puzzle
Tony Hague explains why outsourcing could hold the answer to increased productivity.
There have been numerous solutions put forward when discussing the productivity puzzle, but few have involved more firms focusing on their core competences, writes Tony Hague for bqlive.co.uk.
As chairman of the unique Midlands Assembly Network, I get a firsthand insight into the operations of hundreds of manufacturers every year and one trend is clearly developing…more management teams are choosing to outsource some of their production capabilities in a bid to reduce costs, improve efficiencies and open up capacity.
We have already benefitted to the tune of £3m of new projects secured in the last twelve months, with a number of members working together to deliver added value and new production solutions for clients in automotive, aerospace, oil and gas and renewables.
There are another six opportunities currently in the MAN pipeline as more businesses look at new ways of boosting their productivity.
High profile topic
The ‘puzzle' is probably the industry topic of the year and a lot has already been written about how to solve it…investment in automation, investment in skills, investment in systems.
These are all very valid. However, there has been little discussion about outsourcing, where you source a supplier to deliver your non-core manufacturing operations.
As long as the right strategic partner is chosen, this offers numerous benefits; less unnecessary stock and reduction in work in progress, better cash flow and significantly reduced lead times. It also gives you greater flexibility for volatile volume requirements.
The strength of MAN is that we have expertise across all engineering and manufacturing disciplines and our nine companies are financially strong and invest in world class processes. It's no surprise we are seeing existing and new customers outsource more of their non-core operations to us. It makes perfect sense.
After all this positivity, it's important to note that outsourcing shouldn't be entered into lightly and the merits of any partnership should be explored fully, long before any agreement is signed.
All organisations need to share a similar business philosophy and understand each other's role. There also has to be a period of transition where the necessary learning can take place so the process become transparent and starts delivering the goods.
Whisper it quietly, outsourcing could well be the secret answer to the productivity puzzle.
Tony Hague is chairman of the Midlands Assembly Network and MD of PP Electrical Systems,