What Businesses Dread (but they don't really have to).
The new economic reality, one created by a downturn in the price of commodities, has been easier to predict but harder to avoid for Canada, particularly here in the West. Easier to predict in a sense that no boom is everlasting and "what goes up, must come down" and harder to avoid in a sense that perhaps we shouldn't have had "all of our eggs in one basket".
What some are left with, as a result of this, is a new reality where their current business model is no longer viable. The overhead is too great while
margins are being squeezed and the climate is forcing others into new territories, thus increasing competition. Regrettably only a few will consider
the option of outsourcing their entire production to an external local partner. This is partly due to that instinctual gut feeling that something
sacred is being given away, and partly due to a logical fear of loss of control. Fortunately, these fears are completely unfounded when a real
partner is found that will not only manage the product but enable the client to improve it.
Outsourcing the manufacturing of your product to a partner can not only eliminate any immediate dangers but also positively impact your cash flow, eliminate WIP, reduce risk/exposure and ultimately improve the outlook of your business. Furthermore, your product may be improved as it is now manufactured by someone with a different outlook and manufacturing process while there is also the possibility that this new partnership may yield new business opportunities as your prosperity is now interlinked.
The phenomenon of globalization has resulted in unprecedented outsourcing to developing nations in order to minimize cost but for some this has never been an option. Certain products have to meet stringent quality criteria, the skill set required to fabricate/manufacture is more readily available domestically and the owners prefer to have a manufacturer that is near to accommodate oversight and to ease project management. This is why it is crucial for some to find a reliable partner relatively close to their operational base.
The unavoidable reality of outsourced manufacturing is that there will be hiccups as the relationship matures. It is important to note that any problems occurring in an outsourced manufacturing set-up may be different and new and it is this novelty that contributes to an initial feeling of frustration. As the relationship between partners is reciprocal there will be close collaboration, sometimes beyond what was expected, to solve issues/frustrations with the ultimate goal of enabling the manufacturer to operate as autonomously as necessity dictates.
As you, the reader, might have guessed the hardest part is not deciding to entrust your future to an external partner but rather finding one that is right for you. One way of navigating through the sea of options is understanding ones weaknesses and finding a partner that can fill that gap.