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Capacity Planning

Outsourcing

Process

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Operations Capacity can be divided into different levels. At the Capacity planning level decisions have to be made about resource allocation.

Offshoring is locating operations out of country. Captive offshoring is when the company maintains a control in foreign entity.

We work with lean consultants and operations planning professionals.

Our focus is on firms that have considered or tried better planning and or increases in equipment purchases for example, and are interested in evaluating the option of a lower-cost operations in a new jurisdiction.

For example a small or medium manufacturer is growing and instead of investing in increased capacity in their existing plant they decide to look at lower cost jurisdictions within the North American free trade zone. Here is where we are able to assist.

We help companies develop new operations capacity in new jurisdictions either to improve competitiveness while growing or as a turn around strategy for struggling companies. Please see the following Projects page for information on example industry sectors we are able to assist.

OUR FOCUS

Understanding of your industry

Strategy Development whether related to outsourcing, joint ventures or other structures, we are experts are defining the correct solution for your situation.

Accessible: we are able to develop an optimum pricing strategy or value exchange, not simply relying on service fees

Operations capacity solutions for whom?

Every individual consulting assignment is unique to each company’ situation. The general starting solution we recommend is the Operations Capacity Course. For those that are still not sure the Introductory Seminar is the next best option.

These are the types of people that engage us:

Struggling & Growing Companies, the companies them selves that would like assistance.
Investors including private investors, pension funds, university endowments, and charitable foundations. Co-investing in operational capacity represents an opportunity for these groups to invest in a return generating asset.
Professional service providers. As alliance partners where a accountant, lawyer or management consultant can assist his or her client develop additional options. Or as a operations capacity or outsourcing service firm that would like to subcontract or partner with us.

SERVICES

Companies should not over-commit to an emerging market without the right local partners and business strategies. Dealing directly with local people can be disappointing.

Mergers and Acquisitions: this is a common area of improvement,

Methods we can help you set-up manufacturing or service operations:

Contract Manufacturing / Services or Sub-contracting: pros, cons

Joint Venture (International)

Wholly Owned Subsidiary

Shelter Operation

Outsourced Manufacturing / Services

In the case of a International Joint Venture

We can be one of the parties to participate in and help administer the JV on your behalf. International Joint Ventures are fraught with challenges and having a partner on your side to participate in and help you manage the relationship gives you the advantage.

Joint Venture Partner-Broker

Our main service is being a JV partner / broker for a new JV business that involves both our company to assist your company with its objectives.

This is sometimes referred to as a Joint Venture broker, that is paid in a mix of fees, comission, and equity (common or preferred).

Our joint venture service consists of working with you to define and establish the JV type, and develop and administer the JV together. Please see FAQs for additional general information.

Supporting Services

However our services can be further elaborated on for those that simple require a professional service. In that case we provide the following types of services:

Market research (see our research services)
Market entry planning
Evaluation of the regulatory environment
Legal approvals
Identification of possible partners
Evaluating commercial factibility of possible partners
Manage negotiations with future partners
Risk identification and planning

Plan development

Market research to check viability of entrance plan or pilot program.

Setting up a warehouse, manufacturing facilities, offices.

Site Selection

Start-Up

Supply Chain Assistance

Property Search

Real Estate rental

The types of services we works with: Tax services, legal services, real estate agents, bankers/lenders, government liaison, business associations.

Benefits

Having a foreigner as a local director goes a long way, especially one that understands the challenges dealing with local people represent, we are in this respect a stabilizing and communication flow agent for strategic and operational decision-making.

We also continually recognize deficiencies and opportunities, and bring additional resources where frequently the foreign and local JV partner simply are not able to or unmotivated.

We help obtain grant financing as applicable, an example of an opportunity that benefits all JV parties.

We also help identify and qualify the local JV candidates.

We recognize opportunities that the local JV partner may decide not to mention possibly because as for them there is no benefit (an example in cultural differences), whereas we are committed to the success of the JV.

Having operations established in the jurisdiction also means the business can take advantage of the international trade agreements with other countries.

Favorable tax treatment in North America’s low-cost jurisdiction as well as favorable tax treatment for the JV structures (the JV which is owned by its partners, doesn’t pay taxes on the products or services it receives (instead of buys) from its partners (taxes are paid using agent, representative or distributor type relationships.

Benefits Collaborating with us for Off-Shoring:

Comparable Growth

Joint-venture outsourcing-offshoring partners can have their own growth agenda and the attention you recieve can be diluted overtime as they grow you may feel left behind.

Communications

For efficient long term relationships especially in service off-shoring where collaboration is required, a low cultural and language barrier is important.

Commitment

Talent and cost are not sufficient, there are many possible outsourcing partners that will not put an enfisis in the professional relationship and helping its clients achieve its goals, and instead

Relationship

You need JV partner that will be able to assist as if they were a local collaborator and one that is interested in a long term relationship, help you through tight situations and be relied upon for continuity.

Webinar Information:

Going Global Webinar Course

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Are you the owner, director or senior executive of a small or medium sized enterprise, that is looking for options to improve competitiveness and would like to consider how to access competitive operations capacity globally? In today’s competitive environment, you without a doubt need to consider operations capacity at an international level. We are the resource [...]
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Twelve (12) tips to improve commercialization of ideas

June 28th, 2012 by admin

Work in progress…

Research institution have opportunities available to improve how they engage market makers (co-founder entrepreneurs)

Identify the need for partner(s) / co-founder(s)

We know the inventor/technical/expert is not always going to be the entrepreneur that leads the business aspect of a new venture, each situation is different. Not all technical experts can also be great at generating revenues or developing business, or even have the time to do it as some say. A corollary to this is they need a partner, and to consider the partnership structures available that incentivise, and balances risk and reward. Another corollary is also challenges in decision making in a closer partnership, although being in agreement is policy and the person(s) that start with an idea has a certain opinion seniority, it should also be in agreement that when in doubt the person in charge of leading revenue generation still requires everybody onboard to continue to be behind him/her. This is all decided on at the beginning.

2. Resolve decision making, control, time contribution and exit from the beginning

In the case of researchers, they would be a part-time co-founder, a recommendation is that they think of their research project as one and their commercial project as another, both with different responsibilities, they may have to develop the product for some commercial purposes (off the clock from their research project) remunerated by equity from their commercial project. Their contribution would be time devoted to the commercial project (4-8 hours per week for example). And the contribution of the actual technology measured separately, based on future revenues.

3. Considering valuation in the eyes of the entrepreneur and investors (not the inventor or the investigation institution)

Another aspect that is decided on in the beginning is methods of valuation. An inventor, may think about the product is valued at what was put into it, entrepreneurs and investors may use future (and/or past) revenue valuation, what customers will pay for it and how soon. There are costs and non-certain outcomes associated with a start-up selling any product. A ballpark method to decide:

-is the product or the right to the product, worth so much

-the know-how and contacts of running the operational (servicing infrastructure), sales (market channels, strategy and implementation) and administrative(fiscal, finance, human resources) aspects of the start-up is worth so much, key people paid more with equity than debt

-the work days invested in the start-up (how much would someone like that make elsewhere) are also worth so much.

Depending on the cost of the technology the product may be worth half of the company, maybe more, maybe less. The numbers can change. But it is important to distinguishing from a successful product and a successful business. This may mean that the business will not focus solely on commercialization on the technology, if not investment, additional revenues have to come from somewhere so that the business will survive and grow.

4. Understanding this is not an exit moment.

Starting out there is generally not enough or no pie to go around, more costs than anything, the initial partnership is not a cash-out opportunity for an inventor or cash-flow opportunity for a research institution, on the contrary it is a pony-up on the part of the research institution in commitment, responsibilities maybe more. The product still needs to be further developed continuously forever or until exit, taking into account diverse market desires of its global clients. Workout some regular valuations, discuss participation structures, and then put all that on hold and work together do what you need to do to sell what you have now to those that will buy.

Sometimes a problem where there is someone that has been working on a project for a while is that they don’t realize that some of the time invested maybe a write-off already or has depreciated. A start-up can owe its founder although if the perceived amount owed is too great then the start-up will never happen unless the founder can do a combination of forgiving the perceived debt to him, pushing payments out over the long term conditional upon long terms success or simply accepting equity.

5. Not having ulterior motives. if the number one priority is private funding for research, that is not a focus on commercializing technology. Those are two separate goals that may or may not coincide in a particular situation. But the priority is not commercialization in this case.

Actually it will be tougher to get a financing partner if there is not already an market maker to lead the commercialization. Approaching a leading university based research institution a few years ago to commercialize one of their new technologies, they wanted $1M for one unit or for us to pay their additional research costs, a few tens of thousands of dollars with the right to use the technology on those applications researched. If the unit wasn’t so expensive then maybe some investors would be interested but high prices combined with us having to pay to research. An example of a research institution wrongly identifying opportunities to commercialize as opportunities to cash out. A prototype is not one step from commercialization if it is not cheap enough.

What they were doing is trying to convince the private sector into sponsoring their research, more than trying to commercialize the technology. Commercializing the technology does not mean that the private sector. If you are talking with someone that is trying to get sponsorship for research then that is not the correct person to be dealing with. Research institutions must not be incentivized enough for commercialization in comparison to research. It is probably easier to get grant money for research than it is to try to commercialize something. Activity based funding, funding for research funding for commercial research.

Let the entrepreneur propose the legal structure, or develop the structure together. A research institution having to sell a prepackaged legal structure along with the technology and the possible opportunity to the entrepreneur, when the research institution is not even the one in charge of selling, may not be the best way to go about partnering and commercializing.

6. The research arms of a university cannot always rely upon the universities board of directors, the university has many departments competing for resources. Develop an improved community involvement to help decide which direction to take the institution. The university is part of the community, not domain of only people that work there or who are in the academic sector. Follow and improve upon global best practices.

7. Improve the decision making which technologies to put on the shelf and postpone and which to continue to do research, listen to a variety entrepreneurs. Have longer term, medium and shorter term initiatives. If you don’t very something every year, the world changes faster than that, you are likely not catching on to the newest opportunities. Have projects that create new lesser known opportunities and projects that jump onto what is hot, what’s hot sells, just make a newer better version. Get a global perspective.

8. Sitting on the technology is likely not a winning strategy. Instead of shelving a technology, maybe you need to take a calculated guess and through it out there at a loss as a strategy to get established or recognized, future business may come of it, let go of the reigns of control. Alternatives sitting on the technology does nothing but increase risk an alternative wins first to market. Others around the world will likely try to replicate work done in Canadian institutions.

9. Improve commercialization strategies, that means necessarily considering more than one. Commercialize globally, otherwise it is probably something relatively small. Commercialize a service instead of a product in some cases. Commercialize Global, Canadian companies are not able to commercialize Global why would a innovation start-up do much better? Disney could not commercialize their graphics software and they created thie own service company and it worked. Create a service company instead of commercializing a product or trying to license.

10. Develop multiple co-initiatives, public-private, and research institution-business association, be creative, invest in marketing at first see what kind of response, tweak it, later grow it or scale it down. Industry associations and community incubators can develop research organizations. More perspective and collaborators participating.

11. Develop research based on what entrepreneurs are requesting. When you hear entrepreneurs saying I have this idea or what about this, opportunities can be found there. Basically the entrepreneur developing the business opportunity is in charge. Research institutions need to recognize their role, which most of the time isn’t a market maker, and get on board.

12. Some of the world’s greatest entrepreneurs, did not come from an executive position. Learn to engage and partner with new people with new ideas, after all launching game changing initiatives is not the same as hiring for a government position, learn how to recognize the right people based on a shared vision, that have solutions to the challenges you face.

Posted in Economic News / Commentary | Comments

Business out of excuses in productivity slump

June 27th, 2012 by admin

As other economies stumble, the Canadian economy looks golden. But any gold is badly tarnished when it comes to productivity. Output per hour worked in the Canadian business sector has grown less than 1% per annum over the past decade. Productivity from labour and capital combined has not grown at all.

This is one of the worst records in Canadian history and one of the worst among developed economies. Unless productivity improves, the Canadian economy will be condemned to a very low rate of growth, and in turn this will impinge upon Canadians’ incomes and the ability of governments to fund the programs the public desires.

Twenty to 30 years ago the key to improving Canadian productivity seemed obvious —improve public policy. Key policy features such as high and variable inflation, high public debt, high rates of taxation on capital, high external and internal trade barriers and huge swaths of the economy protected from competition seemed obvious productivity killers.

To their credit, federal and provincial governments have made credible efforts to tackle this agenda. We’ve stayed around 2% inflation for two decades, debt burdens have been reduced dramatically since the 1990s, we’ve undergone a quiet revolution in the taxation of capital that leaves our rates way below those in the United States and among the most competitive in the world, we have eliminated many external tariffs and reduced some internal trade barriers and deregulated some sectors. Perhaps as much as 70% of the action recommended in the name of productivity a few decades ago has been addressed. Yet productivity growth weakened.

Perhaps it would have weakened even more if the action had not been taken. Certainly the remaining elements should be tackled. In this regard it is encouraging to see Canada embarking on expansions to free trade and considering further deregulation of protected industries. But the record suggests we shouldn’t be complacent in thinking completion of the policy agenda alone will do the productivity trick.

New thinking needs to be applied to Canada’s productivity puzzle. And that thinking should focus much more than in the past on business behaviour. Why do Canadian businesses tend to remain small? We have a much larger preponderance of small businesses than our key competitors such as the United States, and on average they are less productive than larger businesses. Why have Canadian businesses under-invested in machinery and equipment relative to competitors like the United States?

Traditionally Canadian businesses blame the tax regime for both outcomes. The large jump from the small business tax rate to the general rate has been described as an obstacle to growing out of the small business tax ranks. And indeed, prior to the beginning of the corporate tax revolution in 2000, businesses faced a higher marginal tax rate on corporate income as they began to lose the small business preferred rate than the marginal personal income tax rate they would face if they took money out of the enterprise. But that is no longer the case. Yet we still observe a cluster of businesses right under the small business income tax threshold.

Similarly, high taxation on capital might have once explained the lack of capital expenditures in Canada but that no longer cuts it as an explanation, especially relative to the United States. Yet, it is puzzling why Canadian businesses didn’t ram machinery and equipment investment through the roof from 2003 to 2007 when they had unprecedented retained earnings, the price of machinery and equipment was falling with the steady appreciation of the Canadian dollar and corporate tax rates were falling. It was a lost golden opportunity to narrow the capital gap with our competitors. And why do exports to emerging economies form only a tiny portion of revenues of small and medium-size enterprises when these economies account for more than half of global output and two-thirds of the growth in the world economy since the recession?

Of course there is no neat way of separating economic outcomes emanating from public policy and business culture. It could all be blamed on Sir John A. Macdonald who launched Canada on a path of protected, coddled industry. As remnants of that policy approach fall away, perhaps business culture will respond positively, albeit with a lag. The stronger Canadian dollar should also change behaviour. No doubt the competitive boost from a chronically low value of the dollar cut the incentive for Canadian businesses to find new markets and invest in productivity-enhancing technologies.

It seems odd that in the current debate over so-called Dutch Disease few pose the question of why most Canadian businesses could not compete with a dollar around parity. They could if they embraced their part of Canada’s productivity challenge. And if Canadian governments completed their part of the productivity agenda, perhaps Canada could get out of this productivity quagmire and have its economy firing on all cylinders. Then we would really have something to brag about to the rest of the world.

Donald Drummond is one of Canada’s foremost authorities on economics and an avid contributor to and commentator on Canadian fiscal and public policy. He is also Matthews Fellow at Queen’s University’s School of Public Policy.

With the global economy in a slump, it is more crucial than ever for Canada to optimize productivity. Visit www.financialpost.com/productive-conversations every Tuesday for insight from some of Canada’s leading business minds on how our country can overcome its productivity challenges and take advantage of new opportunities.

by Donald Drummond, Special to Financial Post Jun 26, 2012 – 7:55 AM ET | Last Updated: Jun 26, 2012 4:30 PM ET

Posted in Economic News / Commentary | Comments

Advice to Companies Before Going Offshore

June 21st, 2012 by admin

Global outsourcing—or offshoring—affords U.S. firms tremendous opportunities for transforming themselves by opening new markets and tapping labor forces overseas. But, while other countries represent significant opportunities for U.S. businesses, a Rice expert on international joint ventures in China cautions companies to think about their long-term competitive strategy before going global.

Global outsourcing is growing rapidly. In India, the Philippines, and China alone, annual foreign investments have reached $50 billion. “Offshoring is very hot right now, and China with its low-cost, highly skilled labor force and impressive infrastructure is one of the most popular destinations,” says Anthea Zhang, an expert in international joint ventures at Rice’s Jesse H. Jones Graduate School of Management.

However, Zhang cautions that companies without the managerial capabilities to carry out a global operation should be careful with regard to global outsourcing. A company that wants to open operations outside of the United States or outsource some of its functions to another country needs to remember that both decisions will increase its organizational complexity. “Offshoring,” she says, “should be part of a firm’s long-term strategy, not an end in itself.”

Zhang advises companies to consider their core competencies and use outsourcing to transform their companies. “If a company can be better off by focusing on what it does really well,” Zhang explains, “it should consider having another company take over its peripheral functions.”

Despite concerns that many American jobs are lost when companies move their operations overseas, Zhang believes offshoring can offer opportunities that benefit U.S. firms. For some American businesses, offshoring is a smart and necessary move to remain competitive.
“American companies aren’t the only players in a global market,” Zhang says. “If they don’t seek the obvious benefits of lower costs from offshoring, they will eventually lose their global competitive advantage. They’ll also lose their contact with emerging markets like India and China.”

Zhang contends that companies who move operations into India and China, for example, are in a better position to learn about and make contacts in those very large emerging markets. “To penetrate markets like China or India sucessfully,” she says, “countries with significantly higher income markets, like the United States, must create alternative ways to serve consumers with lower incomes and in countries with fewer capital resources.”

She points to firms such as Proctor and Gamble that have successfully built their brand images throughout China. “Proctor and Gamble has been in China for over 10 years,” Zhang says. “Consequently, the company has become very knowledgeable about China’s market and has a tremendous advantage over its competitors there.”

Zhang also cites an Indian company that has been experimenting with manufacturing a car that would cost $2,200. “Automobile manufacturers in the United States, Germany, and Japan currently couldn’t compete in India’s or China’s market at that price,” she notes. “To do so will require innovation in both products and processes, and learning about these markets may require locating in them.”

In the not-so-distant future, Zhang believes these innovations—coming as a result of global competition and outsourcing—will benefit U.S. consumers as well.

Sallie Keller-McNulty, SallyPort, Summer 2005

Posted in Economic News / Commentary | Comments

Going global gives Canadian firms a productivity boost

June 15th, 2012 by admin

The benefits to exporters of going global have become a familiar mantra: it helps diversify their reliance on the United States, and can gives them more exposure to high-growth economies like India or Brazil.

Now, add another bonus to the list: being bold also boosts productivity.

A paper released by Statistics Canada on Tuesday explores the relationship between productivity and finding new markets – either domestic or international – between 1990 and 2006.

It finds, in a nutshell, that those who entered new markets became more productive than those who maintained the status quo. It doesn’t have to be a foreign market, though — entering new domestic markets is just as beneficial as entering international ones.

“Experimenting with new markets produced tangible benefits to the overall economy,” said its authors, John Baldwin and Beiling Yan, in their study entitled “Market expansion and productivity growth: do new domestic markets matter as much as new international markets?”

Some other key findings:

– The benefits to businesses are for both those that cross international borders and those that expand across provincial borders.

– Exiting an export market isn’t necessarily a blow to productivity growth – as long as it was followed by entering new domestic markets. Firms that exited export markets, but then explored new Canadian markets, fared just as well as firms that continued exporting.

– Factories that successfully enter new markets start with a greater emphasis on market innovation and perceived higher levels of competition.

– They also tend to have a more flexible and decentralized organizational structure – for example, flexible job design, information sharing with employees, problem-solving teams and joint labour-management committees.

TAVIA GRANT

The Globe and Mail

Published Tuesday, Mar. 20 2012, 1:08 PM EDT

Last updated Tuesday, Mar. 20 2012, 1:12 PM EDT

Posted in Economic News / Commentary | Comments

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Benefits Collaborating with us for Off-Shoring:

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Twelve (12) tips to improve commercialization of ideas

Work in progress…

Research institution have opportunities available to improve how they engage market makers (co-founder entrepreneurs)

Business out of excuses in productivity slump

Advice to Companies Before Going Offshore

Going global gives Canadian firms a productivity boost

Now, add another bonus to the list: being bold also boosts productivity.

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Benefits Collaborating with us for Off-Shoring:

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