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Brian Le Mon
Top 10% Outsourcing

Founder & CEO at Ethical Outsourcing

Member Since May 2013

Research, VIC, 3095

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Despite what most believe and practice, outsourcing is not primarily about cost!
It is about finding a service that can offer the most benefit to your business. This may be a service or skillset or it could be the opportunity to free up your time to focus on areas that generate more income for your business.
Get in touch for a chat if you want to discuss how outsourcing (done correctly) can help with your business.

Outsourcing

Why do Small Businesses get Outsourcing Wrong?

Outsourcing business tasks and services is often cheaper compared to hiring full-time employees. However, many companies adopt a mentality of outsourcing for rock bottom prices, which leads to problems down the line. The smarter approach is to outsource for quality that comes with reasonable prices.​   Having worked with outsourced suppliers and companies for most of my career, I felt I was ...

Outsourcing

A Wake Up call for Australian Manufacturing

Everyone knows that manufacturing in low cost countries has become very popular all over the world, and Australia is not an exception. But what is the reason behind choosing low cost countries versus domestic manufacturing? Is relatively lower cost the only factor behind it? Here are some of the most prominent reasons why low cost countries are preferred over domestic Australian manufacturing a...

Importing

Australian IP Security In Offshore Manufacturing

In recent years Near-shoring and Re-shoring have become popular buzz words in the manufacturing arena. The concept of returning manufacturing to a local or proximally close vendor has become popular with both the media and the general public. Near-Shoring Using the Wikipedia definition, Near-shoring is defined as: “The transfer of business or IT processes to companies in a nearby country, ofte...

Brian Le Mon answered this question

Ilga Horvat
Ilga Horvat, Operations Manager at Hornet Import and Export Group Pty Ltd

Importing

Is the growing trend of offshore manufacturing good or bad for Australian SMEs?

I think offshore manufacturing is a necessity in many industries.

We as consumers have been conditioned to expect the lowest price for items we buy while demanding the highest wage in the world. The ultimate outcome is that manufacturing suffers. We cannot afford to pay premium wages to our staff while being competitive with countries that pay less than 10% of our minimum wage to employees and have lower overheads and ongoing costs.

The Aussie dollar is not plummeting as per predictions earlier this year and has barely seen any time below 0.9 USD so there is no saving grace to be found there. In fact problems with the EURO actually threaten to push our dollar higher again.

We as business owners need to look at what our customers are demanding, not as a vocal outcry but what is actually happening with the purchasers of our products. If we are losing out to lower cost competition then time has come to make some hard choices and try to salvage some jobs and some degree of our company rather than go down with the sinking ship.

There is an opportunity to get lower cost quality products by offshore manufacturing but it is not a simple case of placing a purchase order and getting perfect products. There are many pitfalls and traps that you can encounter along the way.

GBOS specializes in helping companies make the correct decisions and getting your product established in reliable manufacture.

Contact me for more information.

Importing

Who is really to blame for your offshoring failures?

Offshore manufacturing has become the only option for many Australian industries competing in the global economy. But we often hear the horror stories of ventures into offshoring where it has all gone terribly wrong. Poor quality, delivery failures, packaging failures, production items nothing like the sample, the list of potential grievances is extensive.  We then tend to place blame on the v...

Outsourcing

Is outsourcing really offering you a competitive advantage?

I recently saw a topic post on LinkedIn promoting "Outsourcing as your competitive advantage" which got me questioning the validity of the statement. Before I proceed too far into this article let me offer a warning to those looking for a non-outsourcing solution to their problems or a lengthy rebuttal on the ineffectiveness of outsourcing. Sadly this article is not going to the the silver bulle...

Business Management

The Entrepreneurship Bug

Small business is an integral part of the Australian economy. Whether you are a 1 person micro-business or a medium sized enterprise, we all started at the same point. With a concept of an underserved section of the business or consumer community or an idea to improve on an existing offering. Not many of us get it right first time. part of the learning and evolution experience comes from having pr...

Brian Le Mon answered this question

Brian Le Mon
Brian Le Mon, Founder & CEO at Ethical Outsourcing

Customer Acquisition

Has anyone tried a paid referral system to get new customers?

Hi Guys,

 

Thanks for your comments. We decided to go with a referral bonus scheme to try to get more actual value out of our advertising dollar.

It makes sense for me to try to expand my business case beyond my network and to do so more rapidly by using paid referrals.

It will probably also help that we can offer a substantial referral bonus for successful referrals which hopefully will generate a bit of interest.

Thanks again.

Brian

Risk Management

Are you being culturally aware or culturally manipulated?

It is no secret that one of the biggest hurdles to overcome when dealing with a company from a different country is the differences in culture and mannerisms. Everyday actions that may seem fairly innocent and innocuous in a Western Society can be interpreted as being extremely insulting or derogatory in a different culture. We have all heard people talking about "saving face" as being a major ...

Business Management

Gone baby gone!

In many of my meetings with Clients and Consultants, the question of a future dated manufacturing resurgence / renaissance often arises. We are currently experiencing the fallout from a high dollar, high cost of business and high wages resulting in many industries moving offshore to reduce costs and remain competitive in a global marketplace. The result is that many manufacturing companies an...

Startup

Small Business and Startups in economic uncertainty (part 2)

  The challenge of small business and start-ups in the current economic environment is definitely a multifaceted issue. I would not claim to be a guru in this arena, but I can offer advice from my experience in both working for small business and start-ups as well as being in a position where I have started and run businesses at several stages through my career (including my current venture). ...

Startup

Small Business and Startups in economic uncertainty (part 1)

Getting started in business is never an easy road. This is even more apparent in the current economic environment compounded with the need to be globally competitive in order to stack up against foreign imports. Typically we are entering our new endeavor on a shoestring budget or trying to get business running while continuing as an employee in another company to be sure there is enough money to...

Startup

Why do we start a new enterprise?

Getting started in business is never an easy road. Typically we are entering our new endeavour on a shoestring budget or trying to get business running while continuing as an employee in another company to be sure there is enough money to pay the bills. Not many startups have the benefit of being bankrolled by someone with an excess of cash. Especially not until they have proved they are viable. ...

Brian Le Mon answered this question

John Belchamber
John Belchamber, Owner & Senior Consultant at Invoke Results

Business Coaching

Where have all the perts gone?

Hi John,

 

Typically I recommend to my clients / potential clients to sit down face to face and discuss the situation and to see first hand that I know what I am talking about and have the experience to be able to deliver on what they require.

Face to face meetings may not always be practical especially if they are from different cities / countries although you may be able to get a feeling for their level of expertise from a videoconference.

The basic idea is to remove the expert from the environment where they can potentially be prompted (or use Google etc..) to deliver answers to your questions and put them where they need to think on the spot. Most self-proclaimed experts will struggle for answers without their office cues or time to research the perfect answer so in a face to face meeting you can typically see if their "expertise" stems from actual experience or from reading books, blogs or Wikipedia.

 

Regards

Brian

 

Brian Le Mon MPH, BSc

Principal Consultant

GBOS

 

 

Importing

Information Overload

Transferring manufacture to an offshore company is an interesting venture to say the least. Often when company representative are visiting the factory for the first time, it is the first time they have been in the region and possibly the first time they have visited a factory to look at a cost-down manufacturing option by moving offshore. There is often a  sense of urgency attached to this in th...

Importing

Zen and the art of offshore manufacturing

Many company representatives find themselves more than a little taken aback the first time they visit their proposed / current offshore manufacturer. I have heard the following statement repeatedly in my experience working as a facilitator for the transfer of manufacturing "This is nothing like we expected" We often develop a set of presumptions about the environment and the technology from ta...

Importing

P.M. Pupperty.

Manufacturing with on offshore vendor introduces a myriad of complexities into the equation. Some are obvious such as potential counterfeiting and quality issues and the need to become more intimate with the finer details of your product than you ever wished (or thought possible) in order to be able to give direction to the supplier on the minor issues that can result in major brand dilution. O...

Importing

Nothing like the Sample.

Sampling is a vital part of manufacturing. You want to see if the manufacturer is in fact capable of producing the product that you have designed to the specifications that you have given. We know to request a sample before committing to a volume order as part of our due diligence process. The reason I have emphasized the word "part" above is that many of us fall into the trap of believing th...

Business Planning

Sweating the small stuff....

Back in the nineties there was a series of books "Don't sweat the small stuff" you remember the psychological self help type. In your personal life this is likely a good mantra to follow.  Move to a business scenario then it is an entirely different story although many owners and management seem to take the mantra as their business model. "We only concern ourselves with the design and test asp...

Importing

Relationship advice for offshore manufacturing

Long distance relationships are hard. You wonder what they are doing, lie awake at night sometimes wondering if they are interested in your needs and desires. Sometimes you wonder if they are even cheating.  OK, before you start getting the wrong impression here, I am actually talking about your relationship with your offshore supplier.  Once you start looking to manufacture offshore you are...

Importing

To Sea or not to Sea....

The cost to actually get your product from an offshore manufacturer into your warehouse  can sometimes add a considerable amount to the sourcing price.  Often we jump to the conclusion that sending a shipment by sea is obviously going to be the most economical method. If you have (and need) a full container of goods and delivery time can accommodate the traditional sea freight times then this...

Business Coaching

Consultants Anonymous...

I am always a bit reluctant to call myself a consultant in the current environment. The definition and the role of consultant has been dramatically altered and diluted over the generations. Once upon a time a consultant was an industry professional who had extensive experience and was sought after for the experience they held with the hopes of being able to impact some experience onto their clie...

Importing

Have you really thought out your Offshoring decision?

Simply by taking a quick look through our website you will find that a key competency of GBOS is facilitating the transfer of manufacture to offshore vendors. So then you might wonder why would we potentially discourage customers from using this service by asking them to think carefully before they proceed.  Well I think it is about time we actually departed from the traditional bipartisan appro...

Product Development

SPEC IT... SPEC IT GOOD.

In Australia (likely most western countries) we tend to get a bit lazy on the matter of specifications for our products. We place trust in our current supplier to make the recommendations on material that we should use for all manner of items in our final product. From grade and type of metal, PCB laminate, through to the paper used in our packaging and print material and labelling. Typically we ...

Outsourcing

IP Protection is like playing Poker (mostly)

What I am really trying to say is when it comes to manufacturing offshore there is a lot to be said for the impression you give to the supplier. The analogy here is your IP, this is what both players are actually playing for. Customer for protection of his IP, Regular patron (Supplier) for being able to steal the IP for his own use. The quality of the cards received by the Supplier is representat...

Human Resources

Operational Considerations for Offshore Manufacturing

It is becoming a common fact of many first world countries that domestic manufacture is often an expensive luxury that can be ill-afforded. This is especially true for those industries where there is an influx of less expensive foreign competitive products and where the buy decision is more driven by cost than country of origin. The reality is that the minimum wage is rapidly approaching per hour,...

Outsourcing

Outsourcing Essentials 6 - Quality

The manufacturing industry has an uneasy history with outsourcing to Low Cost Countries for cost reduction purposes. Too many times we see the case where a domestic manufacturer has made the decision to move offshore to reduce costs and finds that quality is down, yield is abominable and the product and company name emerges from the outsourcing venture with a seriously tarnished reputation. The bl...

Outsourcing

Outsourcing Essentials 5 - Logistics

Assuming you have succeeded in selecting a suitable supplier and transferring your documentation and instructions to this supplier in a manner that is easily understood and interpreted, you will now be looking at how you are planning to transport finished goods from your supplier to their destination. Do you want all finished goods to return to your warehouse for storage and / or testing and QC c...

Outsourcing

Outsourcing Essentials 4 - Specifications

Once you have evaluated and selected a preferred supplier for your manufacturing requirements and agreed upon contract terms, you should then be in a position to start transferring your IP for current products to the manufacturer. The information you have provided the supplier at quotation stage can be imperfect without affecting the final pricing, however once you are proceeding to manufacturing ...

Outsourcing

Outsourcing Essentials 3 - NDAs & Terms

You have found a supplier you feel is suitable for manufacturing your products and have undertaken the required due diligence to ensure they are a true manufacturer and have the capability and bandwidth to effectively manufacture your product. So now you are looking to move forward with the manufacturer relationship. The first thing you need to consider is how are you going to protect your produc...

Outsourcing

Outsourcing Essentials 2 - Supplier Selection

Lets assume you have thoroughly reviewed your products and processes as outlined in the preceding "Getting Started" article and you have also identified what your key priorities will be in selecting a supplier for manufacture of your products and the break even cost you require for this venture to be profitable and beneficial from your company's perspective. The next problem you will face is " How...

Outsourcing

Outsourcing Essentials 101 - How to Get Started

Outsourcing work is becoming more and more popular in Australia and beyond to due a number of benefits such as outsourcing cost savings and much more. When you outsource some work to low cost countries, your cost of production reduces and you gain an advantage in the market. But as everything in the business world operates, outsourcing services aren't easy on the implementation either. Find out ...

Brian Le Mon answered this question

Wendy Huang
Wendy Huang, Full Time Blogger and YouTuber at A Custom Blog in 4 Minutes

Business Management

What Are Ways To Combat The Rising Cost Of Business In Australia?

First and foremost - be smart.

Don't invest time resources and money into areas of your business that you are not world class (or at least exceptional) at performing. Find someone who is exceptional at this task and look at outsourcing the task to them (whether this be an onshore or offshore company). Focus on the value that your company can add, the items, services, products that your customers would be willing to pay the extra $$ to your company for the peace of mind, satisfaction in knowing that your are personally taking care of these aspects.

I once worked with a company that produced heavy industrial trailers. The company had been around for several decades and had not evolved their mentality beyond doing everything in house even plasma cutting flat metal parts. The option was to outsource these for laser cutting, unit price was reduced, precision was dramatically improved and the plasma cutter was free to spend more time working on those components that could not be laser cut and that made sense to be done in-house. The end result is higher output for a lower cost.

The flip side is time I have spent working with companies in South Korea - everything is outsourced. If you own a company that does PCB assembly, you ONLY do PCB assembly! Other functions are outsourced to another company who has the machinery and expertise to excel. In this way everyone shares and the environment becomes a lot more collaborative than adversarial. They all benefit and they are more cost effective in bidding for projects.

Secondly and following the above - don't get too attached.

You need to analyse your business model with a dispassionate eye. It is hard to do and sometimes the things you need to let go may be those that were closest to your heart upon starting. Remember as much as you love being removed from the cycle of interviews, hiring & firing by running your own business, poor choices can quickly remove you from the SME environment and put you back into employment statistics.


Thirdly - seek external advice if needed

But make sure the adivsor is focussed on helping your business grow, not on extending their contract / lining their pockets. Consultants pop up in many industries, some arrive through being unable to work with their existing skillset and being a good sales person, others come from an industry that has dissolved due to economic pressures or have reached the ceiling within their profession and want to have more from their career. Look for a consultant that has experience, not someone who is "painting by numbers". Those with life experince are more likely to be able to adapt the advice according to your individual situation. They are also more likely to work on an agreed contract price rather than an hourly / daily rate because they have sufficient experience in their work / consulting to be able to ascertain exactly what is required in your situation. Beware of those who work by the philosophy "If you can't be a part of the solution, there is good money to be made in extending the problem"

Fourth - Offshoring is not the "Devil" (reminiscent of Kathy Bates in "The Waterboy")


If you come to the decision that there is no economical way but to conduct certain parts of your business with offshore vendors, then don't feel guilty about it. It is a much better scenario to have a continuing business with a smaller staff contingency then to have a business that has lost it's competitiveness through high domestic costs and is now in Adminstration with NO STAFF. Sometimes you can't save everyone.
Having worked managing electronics assembly factories in Melbourne a decade ago (when there was still some viability in the industry) this is one of the hardest things I have had to come to terms with. Lining up 50% of your staff to advise them there is no work for them does not leave you with a nice warm afterglow, but having your staff turn up for work and finding chains on the gates and the adminstrators looting the facility for every last cent to pay off creditors would be a much worse feeling. All of this being said if you do look to offshoring, BE INFORMED. Do not jump on the China bandwagon because this has the highest prominence. Your product may not be suited to China and there may be other countries that are a much better fit in terms of IP security, stability, import / export BS and capability.

Outsourcing

Why do Small Businesses get Outsourcing Wrong?

Outsourcing business tasks and services is often cheaper compared to hiring full-time employees. However, many companies adopt a mentality of outsourcing for rock bottom prices, which leads to problems down the line. The smarter approach is to outsource for quality that comes with reasonable prices.​   Having worked with outsourced suppliers and companies for most of my career, I felt I was ...

Outsourcing

A Wake Up call for Australian Manufacturing

Everyone knows that manufacturing in low cost countries has become very popular all over the world, and Australia is not an exception. But what is the reason behind choosing low cost countries versus domestic manufacturing? Is relatively lower cost the only factor behind it? Here are some of the most prominent reasons why low cost countries are preferred over domestic Australian manufacturing a...

Importing

Australian IP Security In Offshore Manufacturing

In recent years Near-shoring and Re-shoring have become popular buzz words in the manufacturing arena. The concept of returning manufacturing to a local or proximally close vendor has become popular with both the media and the general public. Near-Shoring Using the Wikipedia definition, Near-shoring is defined as: “The transfer of business or IT processes to companies in a nearby country, ofte...

Importing

Who is really to blame for your offshoring failures?

Offshore manufacturing has become the only option for many Australian industries competing in the global economy. But we often hear the horror stories of ventures into offshoring where it has all gone terribly wrong. Poor quality, delivery failures, packaging failures, production items nothing like the sample, the list of potential grievances is extensive.  We then tend to place blame on the v...

Outsourcing

Is outsourcing really offering you a competitive advantage?

I recently saw a topic post on LinkedIn promoting "Outsourcing as your competitive advantage" which got me questioning the validity of the statement. Before I proceed too far into this article let me offer a warning to those looking for a non-outsourcing solution to their problems or a lengthy rebuttal on the ineffectiveness of outsourcing. Sadly this article is not going to the the silver bulle...

Business Management

The Entrepreneurship Bug

Small business is an integral part of the Australian economy. Whether you are a 1 person micro-business or a medium sized enterprise, we all started at the same point. With a concept of an underserved section of the business or consumer community or an idea to improve on an existing offering. Not many of us get it right first time. part of the learning and evolution experience comes from having pr...

Risk Management

Are you being culturally aware or culturally manipulated?

It is no secret that one of the biggest hurdles to overcome when dealing with a company from a different country is the differences in culture and mannerisms. Everyday actions that may seem fairly innocent and innocuous in a Western Society can be interpreted as being extremely insulting or derogatory in a different culture. We have all heard people talking about "saving face" as being a major ...

Business Management

Gone baby gone!

In many of my meetings with Clients and Consultants, the question of a future dated manufacturing resurgence / renaissance often arises. We are currently experiencing the fallout from a high dollar, high cost of business and high wages resulting in many industries moving offshore to reduce costs and remain competitive in a global marketplace. The result is that many manufacturing companies an...

Startup

Small Business and Startups in economic uncertainty (part 2)

  The challenge of small business and start-ups in the current economic environment is definitely a multifaceted issue. I would not claim to be a guru in this arena, but I can offer advice from my experience in both working for small business and start-ups as well as being in a position where I have started and run businesses at several stages through my career (including my current venture). ...

Startup

Small Business and Startups in economic uncertainty (part 1)

Getting started in business is never an easy road. This is even more apparent in the current economic environment compounded with the need to be globally competitive in order to stack up against foreign imports. Typically we are entering our new endeavor on a shoestring budget or trying to get business running while continuing as an employee in another company to be sure there is enough money to...

Importing

Information Overload

Transferring manufacture to an offshore company is an interesting venture to say the least. Often when company representative are visiting the factory for the first time, it is the first time they have been in the region and possibly the first time they have visited a factory to look at a cost-down manufacturing option by moving offshore. There is often a  sense of urgency attached to this in th...

Startup

Why do we start a new enterprise?

Getting started in business is never an easy road. Typically we are entering our new endeavour on a shoestring budget or trying to get business running while continuing as an employee in another company to be sure there is enough money to pay the bills. Not many startups have the benefit of being bankrolled by someone with an excess of cash. Especially not until they have proved they are viable. ...

Importing

Zen and the art of offshore manufacturing

Many company representatives find themselves more than a little taken aback the first time they visit their proposed / current offshore manufacturer. I have heard the following statement repeatedly in my experience working as a facilitator for the transfer of manufacturing "This is nothing like we expected" We often develop a set of presumptions about the environment and the technology from ta...

Importing

P.M. Pupperty.

Manufacturing with on offshore vendor introduces a myriad of complexities into the equation. Some are obvious such as potential counterfeiting and quality issues and the need to become more intimate with the finer details of your product than you ever wished (or thought possible) in order to be able to give direction to the supplier on the minor issues that can result in major brand dilution. O...

Importing

Nothing like the Sample.

Sampling is a vital part of manufacturing. You want to see if the manufacturer is in fact capable of producing the product that you have designed to the specifications that you have given. We know to request a sample before committing to a volume order as part of our due diligence process. The reason I have emphasized the word "part" above is that many of us fall into the trap of believing th...

Business Planning

Sweating the small stuff....

Back in the nineties there was a series of books "Don't sweat the small stuff" you remember the psychological self help type. In your personal life this is likely a good mantra to follow.  Move to a business scenario then it is an entirely different story although many owners and management seem to take the mantra as their business model. "We only concern ourselves with the design and test asp...

Importing

Relationship advice for offshore manufacturing

Long distance relationships are hard. You wonder what they are doing, lie awake at night sometimes wondering if they are interested in your needs and desires. Sometimes you wonder if they are even cheating.  OK, before you start getting the wrong impression here, I am actually talking about your relationship with your offshore supplier.  Once you start looking to manufacture offshore you are...

Importing

To Sea or not to Sea....

The cost to actually get your product from an offshore manufacturer into your warehouse  can sometimes add a considerable amount to the sourcing price.  Often we jump to the conclusion that sending a shipment by sea is obviously going to be the most economical method. If you have (and need) a full container of goods and delivery time can accommodate the traditional sea freight times then this...

Business Coaching

Consultants Anonymous...

I am always a bit reluctant to call myself a consultant in the current environment. The definition and the role of consultant has been dramatically altered and diluted over the generations. Once upon a time a consultant was an industry professional who had extensive experience and was sought after for the experience they held with the hopes of being able to impact some experience onto their clie...

Importing

Have you really thought out your Offshoring decision?

Simply by taking a quick look through our website you will find that a key competency of GBOS is facilitating the transfer of manufacture to offshore vendors. So then you might wonder why would we potentially discourage customers from using this service by asking them to think carefully before they proceed.  Well I think it is about time we actually departed from the traditional bipartisan appro...

Product Development

SPEC IT... SPEC IT GOOD.

In Australia (likely most western countries) we tend to get a bit lazy on the matter of specifications for our products. We place trust in our current supplier to make the recommendations on material that we should use for all manner of items in our final product. From grade and type of metal, PCB laminate, through to the paper used in our packaging and print material and labelling. Typically we ...

Outsourcing

IP Protection is like playing Poker (mostly)

What I am really trying to say is when it comes to manufacturing offshore there is a lot to be said for the impression you give to the supplier. The analogy here is your IP, this is what both players are actually playing for. Customer for protection of his IP, Regular patron (Supplier) for being able to steal the IP for his own use. The quality of the cards received by the Supplier is representat...

Outsourcing

Outsourcing Essentials 5 - Logistics

Assuming you have succeeded in selecting a suitable supplier and transferring your documentation and instructions to this supplier in a manner that is easily understood and interpreted, you will now be looking at how you are planning to transport finished goods from your supplier to their destination. Do you want all finished goods to return to your warehouse for storage and / or testing and QC c...

Outsourcing

Outsourcing Essentials 4 - Specifications

Once you have evaluated and selected a preferred supplier for your manufacturing requirements and agreed upon contract terms, you should then be in a position to start transferring your IP for current products to the manufacturer. The information you have provided the supplier at quotation stage can be imperfect without affecting the final pricing, however once you are proceeding to manufacturing ...

Outsourcing

Outsourcing Essentials 3 - NDAs & Terms

You have found a supplier you feel is suitable for manufacturing your products and have undertaken the required due diligence to ensure they are a true manufacturer and have the capability and bandwidth to effectively manufacture your product. So now you are looking to move forward with the manufacturer relationship. The first thing you need to consider is how are you going to protect your produc...

Outsourcing

Outsourcing Essentials 2 - Supplier Selection

Lets assume you have thoroughly reviewed your products and processes as outlined in the preceding "Getting Started" article and you have also identified what your key priorities will be in selecting a supplier for manufacture of your products and the break even cost you require for this venture to be profitable and beneficial from your company's perspective. The next problem you will face is " How...

Outsourcing

Outsourcing Essentials 101 - How to Get Started

Outsourcing work is becoming more and more popular in Australia and beyond to due a number of benefits such as outsourcing cost savings and much more. When you outsource some work to low cost countries, your cost of production reduces and you gain an advantage in the market. But as everything in the business world operates, outsourcing services aren't easy on the implementation either. Find out ...

Human Resources

Operational Considerations for Offshore Manufacturing

It is becoming a common fact of many first world countries that domestic manufacture is often an expensive luxury that can be ill-afforded. This is especially true for those industries where there is an influx of less expensive foreign competitive products and where the buy decision is more driven by cost than country of origin. The reality is that the minimum wage is rapidly approaching per hour,...

Outsourcing

Outsourcing Essentials 6 - Quality

The manufacturing industry has an uneasy history with outsourcing to Low Cost Countries for cost reduction purposes. Too many times we see the case where a domestic manufacturer has made the decision to move offshore to reduce costs and finds that quality is down, yield is abominable and the product and company name emerges from the outsourcing venture with a seriously tarnished reputation. The bl...

Brian Le Mon answered this question

Ilga Horvat
Ilga Horvat, Operations Manager at Hornet Import and Export Group Pty Ltd

Importing

Is the growing trend of offshore manufacturing good or bad for Australian SMEs?

I think offshore manufacturing is a necessity in many industries.

We as consumers have been conditioned to expect the lowest price for items we buy while demanding the highest wage in the world. The ultimate outcome is that manufacturing suffers. We cannot afford to pay premium wages to our staff while being competitive with countries that pay less than 10% of our minimum wage to employees and have lower overheads and ongoing costs.

The Aussie dollar is not plummeting as per predictions earlier this year and has barely seen any time below 0.9 USD so there is no saving grace to be found there. In fact problems with the EURO actually threaten to push our dollar higher again.

We as business owners need to look at what our customers are demanding, not as a vocal outcry but what is actually happening with the purchasers of our products. If we are losing out to lower cost competition then time has come to make some hard choices and try to salvage some jobs and some degree of our company rather than go down with the sinking ship.

There is an opportunity to get lower cost quality products by offshore manufacturing but it is not a simple case of placing a purchase order and getting perfect products. There are many pitfalls and traps that you can encounter along the way.

GBOS specializes in helping companies make the correct decisions and getting your product established in reliable manufacture.

Contact me for more information.

Brian Le Mon answered this question

Brian Le Mon
Brian Le Mon, Founder & CEO at Ethical Outsourcing

Customer Acquisition

Has anyone tried a paid referral system to get new customers?

Hi Guys,

 

Thanks for your comments. We decided to go with a referral bonus scheme to try to get more actual value out of our advertising dollar.

It makes sense for me to try to expand my business case beyond my network and to do so more rapidly by using paid referrals.

It will probably also help that we can offer a substantial referral bonus for successful referrals which hopefully will generate a bit of interest.

Thanks again.

Brian

Brian Le Mon answered this question

John Belchamber
John Belchamber, Owner & Senior Consultant at Invoke Results

Business Coaching

Where have all the perts gone?

Hi John,

 

Typically I recommend to my clients / potential clients to sit down face to face and discuss the situation and to see first hand that I know what I am talking about and have the experience to be able to deliver on what they require.

Face to face meetings may not always be practical especially if they are from different cities / countries although you may be able to get a feeling for their level of expertise from a videoconference.

The basic idea is to remove the expert from the environment where they can potentially be prompted (or use Google etc..) to deliver answers to your questions and put them where they need to think on the spot. Most self-proclaimed experts will struggle for answers without their office cues or time to research the perfect answer so in a face to face meeting you can typically see if their "expertise" stems from actual experience or from reading books, blogs or Wikipedia.

 

Regards

Brian

 

Brian Le Mon MPH, BSc

Principal Consultant

GBOS

 

 

Brian Le Mon answered this question

Wendy Huang
Wendy Huang, Full Time Blogger and YouTuber at A Custom Blog in 4 Minutes

Business Management

What Are Ways To Combat The Rising Cost Of Business In Australia?

First and foremost - be smart.

Don't invest time resources and money into areas of your business that you are not world class (or at least exceptional) at performing. Find someone who is exceptional at this task and look at outsourcing the task to them (whether this be an onshore or offshore company). Focus on the value that your company can add, the items, services, products that your customers would be willing to pay the extra $$ to your company for the peace of mind, satisfaction in knowing that your are personally taking care of these aspects.

I once worked with a company that produced heavy industrial trailers. The company had been around for several decades and had not evolved their mentality beyond doing everything in house even plasma cutting flat metal parts. The option was to outsource these for laser cutting, unit price was reduced, precision was dramatically improved and the plasma cutter was free to spend more time working on those components that could not be laser cut and that made sense to be done in-house. The end result is higher output for a lower cost.

The flip side is time I have spent working with companies in South Korea - everything is outsourced. If you own a company that does PCB assembly, you ONLY do PCB assembly! Other functions are outsourced to another company who has the machinery and expertise to excel. In this way everyone shares and the environment becomes a lot more collaborative than adversarial. They all benefit and they are more cost effective in bidding for projects.

Secondly and following the above - don't get too attached.

You need to analyse your business model with a dispassionate eye. It is hard to do and sometimes the things you need to let go may be those that were closest to your heart upon starting. Remember as much as you love being removed from the cycle of interviews, hiring & firing by running your own business, poor choices can quickly remove you from the SME environment and put you back into employment statistics.


Thirdly - seek external advice if needed

But make sure the adivsor is focussed on helping your business grow, not on extending their contract / lining their pockets. Consultants pop up in many industries, some arrive through being unable to work with their existing skillset and being a good sales person, others come from an industry that has dissolved due to economic pressures or have reached the ceiling within their profession and want to have more from their career. Look for a consultant that has experience, not someone who is "painting by numbers". Those with life experince are more likely to be able to adapt the advice according to your individual situation. They are also more likely to work on an agreed contract price rather than an hourly / daily rate because they have sufficient experience in their work / consulting to be able to ascertain exactly what is required in your situation. Beware of those who work by the philosophy "If you can't be a part of the solution, there is good money to be made in extending the problem"

Fourth - Offshoring is not the "Devil" (reminiscent of Kathy Bates in "The Waterboy")


If you come to the decision that there is no economical way but to conduct certain parts of your business with offshore vendors, then don't feel guilty about it. It is a much better scenario to have a continuing business with a smaller staff contingency then to have a business that has lost it's competitiveness through high domestic costs and is now in Adminstration with NO STAFF. Sometimes you can't save everyone.
Having worked managing electronics assembly factories in Melbourne a decade ago (when there was still some viability in the industry) this is one of the hardest things I have had to come to terms with. Lining up 50% of your staff to advise them there is no work for them does not leave you with a nice warm afterglow, but having your staff turn up for work and finding chains on the gates and the adminstrators looting the facility for every last cent to pay off creditors would be a much worse feeling. All of this being said if you do look to offshoring, BE INFORMED. Do not jump on the China bandwagon because this has the highest prominence. Your product may not be suited to China and there may be other countries that are a much better fit in terms of IP security, stability, import / export BS and capability.

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