Done properly, outsourcing manufacturing to China or elsewhere can shave substantial costs and maximise profits. Other benefits can include minimised project time, greater productivity, enhanced technical expertise and a decrease in personnel expenditure. However, it is a process that has to be carefully managed.
A good project manager is crucial. For the project to be a success, they need to be a multi skilled individual. Technical experience helps but leadership, flexibility and forward planning skills are more important. Adaptability, managerial talent and administration skills are needed to expedite processes and projects. Communication skills and an understanding of local business culture are essential, for outsourcing is not about avoiding unexpected pitfalls but about overcoming them whilst retaining a clear business objective.
While a company expects a good ROI when outsourcing manufacturing, they should also be prepared for more unexpected costs and decide whether the strategy is realistic long term. Travel costs can easily escalate when choosing manufacturers, as can the costs of both technology transfer and safeguarding intellectual property.
Time differences can be problematic. A good project manager will be able to straddle two or three time zones without compromising on performance. For example, if a client is in London and the production manager is based in Shanghai this equals a time difference of eight hours. So, at 9am in London it is 5pm in Shanghai, which leaves a narrow window of opportunity for communication; communication is both the most important and most challenging factor when it comes to relocating manufacturing.
Again, using the example of Shanghai and London, a bilingual project manager is ideal. Failing that, your project manager needs to have access to an excellent interpreter who also understands the nuances of business culture of both parties. Working practices should be established early with regular meetings to ensure that communication is maximised between project manager, management, engineers and accountants. The greater and deeper the level of communication between the various organizations, the more likely the project is to succeed.