Offshore manufacturing has become the only option for many Australian industries competing in the global economy. But we often hear the horror stories of ventures into offshoring where it has all gone terribly wrong. Poor quality, delivery failures, packaging failures, production items nothing like the sample, the list of potential grievances is extensive.
We then tend to place blame on the vendor as being either incapable of producing to our specifications, trying to dupe us once they have the contract or simply being incompetent.
So what is really the root cause of our headaches here?
Is offshoring really the road to tarnished reputations and financial disaster?
I recently saw a topic post on LinkedIn promoting "Outsourcing as your competitive advantage" which got me questioning the validity of the statement. Before I proceed too far into this article let me offer a warning to those looking for a non-outsourcing solution to their problems or a lengthy rebuttal on the ineffectiveness of outsourcing.
It is no secret that one of the biggest hurdles to overcome when dealing with a company from a different country is the differences in culture and mannerisms.
Everyday actions that may seem fairly innocent and innocuous in a Western Society can be interpreted as being extremely insulting or derogatory in a different culture. We have all heard people talking about "saving face" as being a major concern within Asian culture and due to the amount of international business conducted with SE Asia anyone who deals with workers and management in the region is particularly sensitive to the possibility of causing their business partner to "lose face"
As is often the problem with trying to compensate for an issue that does not have predominance in our culture, many businesses and representatives in SE Asia tend to take the avoidance to extremes often at the cost of their own dealings and position in the negotiation & operations of the business.
In many of my meetings with Clients and Consultants, the question of a future dated manufacturing resurgence / renaissance often arises. We are currently experiencing the fallout from a high dollar, high cost of business and high wages resulting in many industries moving offshore to reduce costs and remain competitive in a global marketplace. The result is that many manufacturing companies and sometimes entire industries are now moving to an offshore manufacture model.
This is not a new phenomenon. Years ago, I experienced the transition to offshoring of one of the first industries to succumb to the differences in costs between Australia and LCC manufacturers - Electronic Manufacturing.