Lack of Control Companies will generally lose some control and visibility when they outsource to LCCs, creating increased risks. Choosing a domestic manufacturer brings many benefits that, for certain businesses, may far outweigh any drawbacks. You will need letters of credit verifying payment. Material costs are generally the same worldwide, especially for electrical components. We are a global, single-source partner providing collaborative product development, design, and manufacturing services to companies throughout the world. However, there are downsides to manufacturing in LCCs that may erode expected cost savings or create other commercial disadvantages. However, inherent challenges still exist in producing consistently good quality including poor communication resulting from language barriers and time-zone differences, training limitations, and reduced on-site technical support. This allows you to start your operation quickly and scale the business as needed.
If you have a specialized product that's in high demand and needs to be delivered reliably on a schedule, domestic sources are probably the best choice for you. Some countries have fewer intellectual property protections, putting your business at risk. This can be very detrimental due to increased lead times to customers, incremental inventory carrying costs, and rework that may be required for engineering changes that occur while products are in the supply chain. Other things to consider when choosing foreign manufacturing: Ultimately, the decision lies in your manufacturing needs and what ethical considerations will keep you awake at night. Let us help your company scale for success. This can allow you to funnel more money towards marketing and developing your products. Extended Supply Chain The manufacturing of products in LLCs may add as much as a month to the overall supply chain due to additional transportation time and communication delays. In most cases you have to order in fairly large quantities, so you need fairly large orders. In the past two decades, there has been a dramatic shift by technology product companies to outsource manufacturing to low-cost countries (LCCs) like China, India, and Mexico. Foreign manufacturers are often much cheaper than domestic sources; and while your product may be made by a debt indentured worker in an ecological wasteland, your costs of labor could be reduced by as much as 80%. Contact us today to find out more. If you're developing an item for mass production, choosing where and how it's manufactured is essential to your trajectory and brand as a business. We have more than forty years of experience partnering with businesses to help them successfully design, manufacture and launch new products. The cost benefit analysis of outsourcing to LCCs should include all logistics costs including freight, duties, and insurance. After you evaluate these potential disadvantages to outsourcing your products to low cost countries, you may discover that the total cost of manufacturing in the US is actually lower. Domestic Manufacturing, « Flexible Manufacturing and the Future of Apparel, Developing a Medical Device: A Process Overview ». At a minimum, the know-how to manufacture products may be applied to competitors’ products. There are many advantages to overseas manufacturing the biggest being a cheaper price. Low Labor Content The labor content of many electronic and electro-mechanical assemblies is very low, sometimes less than 10 percent of total product cost. Please visit our blog for the latest company news and industry insights.
Without customs and shipping time, orders can be turned around faster and shipped much sooner that if manufactured overseas.
The reason seems obvious: on the face of it, the lower cost of labor appears to allow competitive pricing of a company's products. Being physically closer may also offer you deeper insights into the quality control and supply chain elements of your business. The United States has manufacturing and labor standards, ensuring a higher quality work environment for employees and other guarantees to help consumers feel good about purchasing the product itself.
As these disadvantages become more apparent, many companies are reverting to US contract manufacturers. Weighing the Pros and Cons of Overseas Manufacturing. What Is the Difference Between Capitalism and Socialism?
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