Outsourcing 101: Hidden offshore costs

It’s easy to be bowled over by fantastic rates offered by offshore suppliers and for some businesses, offshore arrangements really do offer the most affordable, reliable solution. Lower overheads in Asian countries, in particular, have made manufacturers in China and Taiwan ‘go-to’ suppliers for metal and plastic components.

China, especially, has become so well known for its cost effective production that Contract Managers often take it for granted that it will be the cheapest option, without actually delving into more detailed costs. Transportation, business travel and operational costs can quickly mount up, and that’s without taking into account the greater level of internal management needed to supervise offshore production.

Transportation and Logistics
Transportation from China is relatively simple, if a little slow compared to domestic delivery. That said, shipping a component from China does leave your supply chain open to more variables, with any minor delay creating a domino effect along the supply chain that can increase costs and hold-up production.

Basic transportation costs can also vary wildly, depending on production volumes, transport options and location; many of the cheaper factories in China are based in more remote areas that can cost more to ship from.

Communication
Careful communication and cultural awareness are both prerequisite for successful overseas outsourcing and, depending on the complexity and production frequency of your project, they can become time consuming for you and your staff.

If your project is a simple continuous run, with regular shipping dates, communication between your business and the offshore plant can be minimal. Once any complications arise, however, that correspondence can escalate. It’s also a great idea to pay at least one visit to your manufacturing partner, whether they are overseas or on home turf, to help cement that business relationship from the start (and check that all is as it should be).

How Steelplan can help
Many new clients are surprised at just how competitive our rates are compared with overseas suppliers. Outsourcing to a plant in the UK reduces some of the variables related to offshore production, simplifying transport and logistics, reducing turnaround time and enabling simple communication between teams.

Blueprint Programme
Our Blueprint Programme is available to help you make the right outsourcing decision for your business. We can manufacture a prototype of your product or component, free of charge, providing a clear and transparent blueprint of our production process and a detailed quotation, so that you can see first-hand how our service compares to offshore suppliers without any disruption to your existing supply chain.


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