TOP TIPS FOR DECIDING WHETHER TO MANUFACTURE IN THE UK OR OFFSHORE
When looking for manufacturing partners, one of the key decisions you’ll need to make is whether you want to produce in the UK, or are prepared to manufacture offshore. Read our top tips.
There are many things to take into consideration – below is a list of some of the pros and cons:
OFFSHORE PRODUCTION
Benefits
1. Costs: Offshore production is generally more cost-effective, especially when producing large volumes. Production costs will vary from country to country.
2. Machinery and technology: Unfortunately, there has been a lack of investment in manufacturing for many years in the UK, and offshore factories are more likely to have the most up-to-date machinery and CAD/CAM systems. This is particularly applicable to accessory and shoe production.
3. Large pool of skilled labour: Some countries have a pool of skilled of specialists artisans, particularly in craft areas and embellishment.
Disadvantages
1. Costs: Economies of scale dictate that small volumes would not achieve favourable costs, and some factories have high production minimums. Also, you will most likely be subject to currency fluctuations which can affect your profit margin.
2. Quality control: It will be harder for you to QC your production. You will have to factor in to the production cost, your travel expenses to visit the factory or have a local agent to work on your behalf.
3. Communication: Does your factory have English-speaking staff, or can you speak the local language? You also have to take into account the time differences and whether they have good broadband connections.
4. Logistics: If you are having samples made overseas you will have to allow for the courier costs of sending raw materials/toiles/samples back and forth. Some of this would be avoided if the factory are sourcing materials locally for you. When working out your production schedule you must allow shipping time (could be several weeks) and also be prepared for production getting delayed or goods stuck in customs. Transport, delivery and insurance costs will also need to be factored in and with the very rising cost of fuel these costs are only going to increase.
5. Bureaucracy: In this post Brexit world importing and exporting from the EU has become more complicated and costly – this should also be factored in to your direct costs.
6. Cash flow: Until you build a relationship with a factory, they may well want 30 -50% payment up front, and the final payment when goods are collected.
7. Supply Chain Disruptions: The pandemic and rise in fuel costs shows us that the further afield you produce the more vulnerable you are to supply chain disruptions, with some brands missing seasons or letting down customers as a result.
UK PRODUCTION
Benefits
1. ‘Made in UK’.This can add value to your brand.
2. Costs: Your production costs may be higher, but you will have more control over them and they won’t fluctuate.
3. Smaller quantities: UK factories are more willing to produce small quantities.
4. Control: You will be on hand to check the quality and deal quickly with any problems that may arise.
5. Communication: You still have to be organised with your production processes, but it will be easier.
6. Shorter lead times: You will be able to produce orders more quickly as you won’t have to allow extra shipping time.
7. Delivery costs:Tthese can be kept to a minimum and you don’t have to worry that your goods will get stuck in Customs.
Disadvantages
1. Cost: Labour costs are far more expensive in the UK, and therefore the price of production will be higher.
2. Skill shortages: The situation is improving, but manufacturing has been in decline and therefore it can be hard to find good sample and production machinists and cutters.
3. Machinery: There is a lack of machinery investment, so it may be hard to get your product made.
4. Digitisation: Manufacturing processes have been vastly improved with CAD/CAM systems. However, the cost of these systems has been prohibitive for many UK factories.
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