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July 2017

The Challenges and Real Cost of Offshore Manufacturing

For high volume manufacturing, the low cost and readily accessible labor pool from offshore manufacturing is a key advantage for many companies. However, as technology drives increased customization, shorter production runs, and a move to an extensible platform based product families, the advantages begin to disappear for a growing population of companies with low to medium volume production requirements.

These smaller programs face several key challenges when looking overseas for a contract manufacturer, including the requirement to guarantee large order quantities. If they do find a willing vendor, the US-based OEM will have to bear the full cost and risk of poor quality from the lack of standards and processes, as well as administrative overhead from language, culture, and time zone differences. With each of these challenges, the total cost and time-to-market begin to rise. Add in the requirement for upfront payment of fees and production costs and many companies start to get locked into a bad situation. The window of opportunity for product launch begins to fade, your competition beats you to market, and the opportunity is lost. Read more…

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