PA business performance expert, Amdi Hansen, has had an article published in Effektivitet discussing outsourcing strategies. Outsourcing has helped many manufacturing companies survive by moving activities to low-wage countries and reducing costs. However, an increased desire to maintain core competencies within the company, and challenges with quality and long lead times, has led to an increase in companies bringing back the production. Also, other factors such as automation, cultural differences and better access to technology and knowledge have an impact on companies’ decision to bring back production.
Amdi says: “If companies want to become better at planning their outsourcing and keep other parts of their production at home, they need to reduce the complexity in the overall value chain. Simplicity can help create agility and an overview of what processes should be outsourced and what should be kept in-house.”
To reduce complexity, companies need to reduce the number of mutually dependent relations such as products, business areas, employees and customers, and then increase best practice around processes and overall business goals.
“By reducing complexity, a company becomes far more competitive and is better able to make considered decisions about what products, processes and jobs to outsource. Outsourcing or offshoring your production is a risky business, but if companies manage to reduce the overall complexity, they are well on their way,” says Amdi.
Amdi Hansen is an business performance expert at PA Consulting Group