Every business decision hinges on understanding the costs and benefits. Whether you are deciding on kinds of raw materials you need or which manufacturer you’ll partner with, you need to look at all the facts.
With the lure of cheaper labor and lower costs, offshoring production has been a trend in plastic injection molding. But that trend may be shifting as the value of U.S. manufacturers becomes more apparent.
One of the more obvious values in keeping production domestic is a short supply chain that easily and quickly adapts to changing business needs.
There are more instances of failed delivery, delays, and lower quality products when companies go offshore.
“After Boeing, an aeroplane-maker, outsourced 70% of the development and production work on its new 787 Dreamliner to around 50 suppliers, it suffered huge delays because its outsourcing partners failed to produce parts on time. In 2005 Deloitte Consulting looked at 25 big companies that had outsourced operations and found that a quarter of them soon brought them back “in-house” because they could do the work themselves better and cheaper.” - The Economist, 2013
There are real risks associated with offshoring your supply chain. Each one needs to be weighed and considered.
Hidden costs
Offshoring may offer lower wages to laborers, but there are extra costs to consider in shipping container expenses and duties on imports.
Unexpected travel if engineering or design problem arises
What’s your plan when something goes awry during quality control or testing? Will you have someone on hand at the facility to handle the problem, or will you need to fly out a more trusted engineer? These unexpected, costly problems can snowball and drive up your cost per unit.
Language and cultural barriers
Trust occurs when everyone is on the same page. This may not always be the case in an offshoring environment. Questions, which should have been resolved months before, aren’t even asked until it’s too late.
Delays in lead time and communication
If production facilities and engineers are across the world, product cycles will take longer. You’ll need to account for extra time in shipping, delivery, and communication. If projects stall or hit delays, time to delivery will increase even more.
Less innovation
Company success depends on continual improvement and innovation. If you’re company is too busy putting out fires, there won’t be any time (or money) left to invest in new market opportunities.
Inconsistency in product quality
Standards in labor, manufacturing practices, technique and other factors may vary widely overseas. The quality of your product is going to depend on a steadfast quality control process that quickly identifies and remedies flaws before wasting time and money on production.
Legal issues
The legal system overseas may not be as robust as it is in the U.S. Nightmare scenarios of intellectual property fraud are costly.
Looking to source your next injection plastic molding project?
Minimize the risks in your supply chain by partnering with an experienced, U.S. based plastic injection molder. Murray Plastics provides custom injection molding services with guaranteed quality, short lead times, globally competitive pricing, and support from industry experts and engineers at every step of the way.
