Can outsourcing reduce the risks of the productivity puzzle?

Posted on 2 Dec 2015 by Callum Bentley

The boss of a unique manufacturing collective is predicting that the answer to the productivity puzzle could rest in more firms focusing on their core competences.

Steve Gaston, business development director of the Midlands Assembly Network (MAN), believes we are beginning to see a growing number of companies choosing to outsource some of their manufacturing capabilities in a bid to reduce costs, improve efficiencies and open up capacity.

Steve Gaston, business development manager, Midlands Assembly Network.
Steve Gaston, business development manager, Midlands Assembly Network.

More than £3m of new projects have been taken on across the group in the last twelve months, with a number of members working together to deliver added value and new production solutions for clients in automotive, aerospace, oil and gas and renewables.

There are another six opportunities currently in the MAN pipeline as more businesses look at new ways of boosting their productivity.

Having been involved in manufacturing for nearly 35 years, Gaston explained: “The ‘puzzle’ is probably the industry topic of the year and a lot has already been written about how to solve it…investment in automation, investment in skills, investment in systems.

“These are all very valid. However, there has been little discussion about outsourcing, where you source a supplier to deliver your non-core manufacturing operations.”

He continued: “As long as the right strategic partner is chosen, this offers numerous benefits…less unnecessary stock and reduction in work in progress, better cash flow and significantly reduced lead times. It also gives you greater flexibility for volatile volume requirements.

“The strength of MAN is that we have expertise across all engineering and manufacturing disciplines and our nine companies are financially strong and invest in world class processes. It’s no surprise we are seeing existing and new customers outsource more of their non-core operations to us. It makes perfect sense.”

The Midlands Assembly Network is a collective of eight sub-contract manufacturers and a specialist design consultancy who work together to win work at home and overseas.

The group – including Advanced Chemical Etching; Alucast; Barkley Plastics; Brandauer; Grove Design; Mec Com; Muller Holdings; PP Electrical Systems, and SMT Developments, employs 700 people across 12 factories and this year will smash the £70m combined turnover barrier.

It offers every mechanical, electrical and electronic engineering process, including automation; castings; control systems; etching, fabrication; injection moulding; PCB development, and precision pressings.

Managing director of Muller Holdings, Paul Bethell added his support: “As a group, we have a proven track record of managing complex assemblies and supply chains – both at home and for customers in more than 20 different countries.

“MAN has the capability to take on outsourced operations as individual companies, as partnerships of two, three or four firms and we are even in advanced discussions with a renewables customer to sign a deal that will involve the entire group.

“In essence we are taking the risk out of the equation and, judging by the upturn in orders, it’s a service industry is crying out for.”

The Midlands Assembly Network is also working alongside associate partner Warwick Manufacturing Group (WMG) to achieve even greater productivity gains.

Over the past 12 months this has included six managers completing the Innovation in Business Leadership programme, a number of process improvement projects and the introduction of ‘Smart Factory’ technology.