While the UK manufacturing sector battens down its hatches as the global downturn continues to wreak havoc on worldwide markets, Hans de Haas, CEO of Bianor, an injection moulding firm based in Poland, argues that there has never been a more important time to revise supply chain strategy and keep a tighter rein on logistics.

Someone once said that drastic times call for drastic measures and while these are certainly unprecedented economic times, now is not the time to make knee-jerk reactions but rather to take a considered approach to optimising supply chain processes and improving cost efficiencies.



According to a recent international study by Capgemini Consulting, the global financial crisis leads the list of most influencing factors for the supply chain agenda in 2009. In fact, almost two thirds (65%) of managers involved in the supply chain argue that the worldwide economic slowdown will be the biggest issue they face this year.

With the crunch continuing to sink its teeth into the global economy, the vast manufacturing powerhouses of the Far East are no longer the viable, cost effective, attractive option they once were. Outsourcing production to far-flung destinations such as China and India just cannot afford UK businesses the flexibility they require, particularly in these tough trading times when satisfying customer demand quickly and effectively is a must.



Poles apart from the competition



Looking closer to home and considering outsourcing options in Europe are a sure fire way for British firms to combat the cost and time impact of lengthy overseas inspections helping to cut down order lead times.

Despite making UK exports more competitive, the weak pound has so far failed to lift the fortunes of manufacturers as global demand stalls. With Poland firmly outside the eurozone, it represents a haven for British outsourcing.

EU enlargement has seen growing trade with new member countries in Central and Eastern Europe and as one of the most ‘western-looking’ of the former Eastern Block countries, Poland serves as a useful gateway to the East and West.

This year, the Polish economy is expected to outperform most of the emerging European economies and to make a quicker recovery. It looks set to fare better than its regional peers the Czech Republic and Hungary which are forecast to contract by 2.1 per cent and 3.4 per cent respectively this year.



According to UK Trade & Investment (UKTI) in 2008, the UK retained its position as Poland's fourth largest trading partner and Poland remained the UK's largest export market in Central and Eastern Europe. UK exports to Poland in 2008 exceeded £2.9 billion – some 24 per cent up on the previous year. And 15 per cent of Polish exports worth £ 4.2 billion went to the UK with total value of trade amounting to £ 7.1 billion, up 19 per cent against 2007.

If the relative strength of the Polish economy compared to its other European counterparts is not convincing enough, the quality of the Polish workforce is a further key strength. Poland has one of the best-educated societies in Europe, with a highly-skilled, multi-lingual workforce and English widely spoken throughout the country.



Furthermore, Poland is hosting the European Football Championships in 2012, along with the Ukraine. Preparation for EURO 2012 is a huge long-term project for Poland generating numerous opportunities across a number of sectors and triggering significant investment in the country’s infrastructure.  



Shortening the leash



The decision to eshew the Far East in favour of more local opportunities is complex and not an easy decision to make. In order to maintain competitiveness, businesses need to pay due consideration to the total acquisition cost, time constraints on staff and lead times and not just focus on the more cost effective labour rates.



A European location provides many commercial benefits for businesses compared to more far-flung countries such as China, where site inspections can take up to two weeks when flights, jet lag, transfers to production centres and problems with communication are factored in. For example, a quality controller may visit a factory like Bianor in Eastern Poland in just one day at manageable costs compared to an extended trip and the high associated travel costs to Asia. 

Quality of output, cost of production and time requirements to inspect and ship tend to represent the ‘big three’ for businesses seeking to outsource production. Considering working with businesses closer to your domestic market and partnering with Polish firms offers a real alternative in all three arenas allowing companies to reinvest time and save money that can be ploughed back into the business. 



Taking the plunge



As a multitude of businesses put the brakes on advertising, recruitment and expansion plans in a bid to ride out the economic storm, it is vital that manufacturers resist the temptation to retreat into a corner to lick their wounds, and instead look at ways to buck the downward trend. It goes without saying that doing nothing is just not an option for manufacturers in the current economic climate.



The supply chain manager's challenge is to actualise cost reduction through innovation and optimised supply chain processes, in order to improve cost efficiency. This will result in a supply chain that provides a significant competitive advantage when the recession is over.