sophisticated strategies to meet changing
customer demands. The range of choices
facing buyers is now more complex than ever
- which is why it is critical to know what is
happening in the marketplace. One factor that
is playing a role in the continued success of
UK subcontractors is that you can’t always get
what you want when you are dealing with a
supplier thousands of miles away.
‘In order to offer customers the service,
flexibility and response they require - and to
give companies the control over their own
operations that this requires - there has been a
growing tendency towards dual sourcing. By
all means use low-cost suppliers on the other
side of the world to make all the standard
long-running components - as long as you
have pretty good visibility about what you are
going to need in a month's time, and it doesn’t
matter if the parts spend a month on a boat.
But if you are offering anything other than a
very simple commoditised product, and you
don't want large buffer stock in a warehouse
somewhere, you need to have a strategy that
lets you protect your supply, deal with peaks
and troughs in demand, and enables you to
respond quickly to customers' special
requirements.’
UK suppliers benefit from dual sourcing
That strategy will normally depend on using a
UK or Western European supplier.
Hamworthy Heating, for example, one of the
companies outlining its experience of
sourcing from China in this year’s Subcon
Seminar sessions, reckons that it needs to
source around 30% of the requirement for
each product in the UK to allow it to be
responsive to customers and even out the
peaks and troughs in demand.
In his presentation, Hamworthy’s
Operations Director Terry Mahoney explained
his thinking. ‘We are a fairly-low volume
manufacturer, but we offer our customers
july 2008
flexibility and a very wide range of products.
Literally, and without any loss of efficiency,
the next boiler we make could be anything in
our range. We can receive an order for a
£30,000 boiler today and build it and ship it
on the same day. So as well as needing them
for security of supply, we also need our UK
suppliers for flexibility. Parts from China are
on a long lead time, but our UK suppliers can
deliver the day after tomorrow if we need
them to.’
As a rule of thumb, if you are planning to
source from a supplier in China then
Hamworthy reckons you should be planning
to purchase at no more than 50% of the exworks
price of a Western European supplier
because of the extra costs involved - in
transport, inventory, contingency plans and
management time, for example.
The balance can be a delicate one - in the
past year global increases in metal and fuel
prices have had a major impact on the cost of
making components in China and the Far
East and shipping them to the UK. This has
brought effective prices more in line with
those of UK manufacturers, and there is no
sign of this trend reversing. At the same time,
exhibitors such as Components Worldwide
and Shakespeare Engineering have
successfully integrated overseas sources and
facilities with their UK operations.
Exhibiting pays dividends for UK subbies
Indeed, with the focus in past years having
been on the rise of the low-cost economies, it
is perhaps easy to overlook the fact that the
majority of the exhibitors at Subcon are from
the UK - and they are there because it brings
them business. Syspal, for instance, says that it
won a £500,000 order as a result of exhibiting
at Subcon 2007. Cosworth received a multimillion
pound enquiry at this year's Show,
and other major players such as Mann
Engineering and Responsive Engineering also
Subcon 2008 was the best in ten years says
Paul Darwent of Mini Gears (right) - and
75% of exhibitors said they had booked new
business as a result of participating
subcon scene
expect exhibiting at the show to pay dividends.
‘We made 40 new contacts and we got
everything we wanted out of the Show,’ said
Rolf Fuhrmann of Mann Engineering, while
Denis Henderson of Responsive Engineering
commented that the show was, ‘a very positive
experience, a high number of people through
the stand, all new contacts with two or three
we are really hopeful about’.
As John Tildesley of WH Tildesley put it:
‘We are very pleased. The people here have a
definite agenda - serious buyers with supply
problems who are actively seeking us out. We
have seen some big hitters who are potentially
very substantial customers and I’d expect to
get four or five important new accounts from
Subcon 2008. The business generated has been
exceptional. We will be back in future.’
Commenting on the consensus that Subcon
2008 was a roaring success, Subcon Exhibition
Manager Jonathan Clark said: ‘Almost
everyone we have spoken to has commented
favourably. Core visitor numbers have
increased by 20% since 2006 and there is now
a real buzz surrounding Subcon. This was
reflected in the quality and quantity of both
visitors and exhibitors. What is more, an
astonishing 50% of UK participants re-booked
on site for next year - a figure that is
underscored by a deluge of testimonials we
have received from satisfied exhibitors. It’s a
good platform to build on and we are
confident about delivering an even better
show next year.’
Subcon 2009 is taking place at the NEC, on
9th - 11th June 2009.
www.subconshow.co.uk
MWP
71
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