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Tuesday 31st January 2023

Secure Supply Guarantee

Secure Supply Guarantee...

It's not uncommon for UK companies to place orders for large quantities of basic components with overseas manufacturers in the expectation of making savings even after delivery costs are factored in.

The decision making process appears reasonably straightforward. Is the company skilled enough? Yes. Does the volume required still make it cost effective? Yes. OK, let's do business. This fails, however, to take account of a number of vital considerations:

  • Risk
    • How does one monitor a job on the other side of the world?
    • What are the quality control standards/procedures?
    • How will the product be transported?
    • Will it arrive safely and on time?
  • Product development. The volume required to achieve cost-savings may equate to twelve months' stock, which is bad news if the design needs amending or updating, let alone the price of holding the stock.

In addition, there are no Just In Time benefits, instead it can call for substantially increased physical stock holding and related capital costs.

Higher taxes and labour costs can make life difficult for UK manufacturers. However, Being at the forefront of technology and maximising efficiency via new machinery, can help counteract some of these costs.

Some machinery on our factory floor now is so advanced that it's able to manufacture extremely complex components from start to finish in just one operation and one operator could look after several of these machines at a time.

The same component manufactured overseas, however, where technology may not be as advanced may require several machines, each with its own operator. It's not merely a question of the time to set up the job on a machine, complete one simple operation and then release the job to move to the next machine and repeat. This inefficient 'conveyer belt' approach not only increases the number of staff required, but also time taken and the margin for error each and every time it is set.

MCS has developed a unique solution via intelligent machinery. "A former customer who had opted for the perceived benefits of foreign manufacture returned to us following the trauma of a long awaited shipment from overseas. Not only was it late but when it did arrive it was defective," explains Warren Gray, MCS Director. "They desperately needed a replacement batch to keep their production line going. Because it was a part we'd manufactured before, we already had the drawings, tooling and the program, we were able to help them out. The success of this experience gave us the idea of offering a "manufacturing insurance" allowing companies to source overseas, with the safety net of a local quality alternative at short notice. MCS is supplied with a drawing by its customer, has its team write the CNC program and produce a batch of components as a sample. They can then continue to source that component overseas in the knowledge that if anything goes wrong, MCS has the capability to produce that component at short notice.

MCS has an increasing number of customers who have taken out this "insurance". Several have even ceased importing altogether, preferring to pay slightly more for guaranteed timeliness, less stockholding and zero defects quality.

Foreign manufacture has its risks. The introduction of cutting edge technology in the UK is reducing costs and increasing efficiency, resulting in increasingly marginal financial benefits of sourcing from foreign manufacturers. The question now begs, is it worth the risk? MCS customers believe the answer is an emphatic no, but even if companies continue to source offshore, they know they can now insure themselves against the risk.

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