China and India are not the answer, says Cambridge expert

Many firms are relying too heavily on offshoring to countries such as India and China. That’s the view of Paul Christodoulou of Cambridge University Institute for Manufacturing (IfM). Speaking at the International Subcontract Manufacturing Show in Birmingham, today (22 April), Christodoulou warned that by so doing, they were failing to establish effective global production networks. Businesses needed to establish a systematically designed global ‘footprint’ or network, attuned to the constantly changing business environment, rather than pursuing quick cost reductions, he said. Christodoulou, who is a Senior Industrial Fellow at the IfM and co-author of its recent report ‘Making the right things in the right places,’ argued that the real long term benefits would come not from quick fixes, but from a systematic approach to developing production networks. Many of the world’s biggest manufacturing firms could be missing out on “breathtaking” benefits, he said, because their production networks were not designed to be suitable for 21st century markets. Many companies were using international networks they inherited via mergers and acquisitions. The resulting legacy was a haphazard collection of plants that typically lacked global coherence and were more suited to serving yesterday’s customers than tomorrow’s. Companies needed to define the role of individual factories clearly, rather than asking plants to be jacks of all trade, he went on. Specialised plants built into a strategically-informed network would perform more effectively.