Skip to content

Does manufacturing abroad hurt your business?

--Advertisements --

Has your company conducted a comprehensive analysis of the benefits and rebates of how overseas manufacturing affects your bottom line? All of the declining ROI can result from outsourcing to reduce manufacturing costs. Often, savings on the end of the product can lead to higher losses in the supply chain, including quality problems and a lack of inventory that impede sales.

Read on to learn more about the foreign manufacturing factors that are rarely discussed and that could hurt your business rather than help you.

Quality issues difficult to solve quickly.

Two of the biggest manufacturing problems overseas are the proper training of foreign employees and the establishment and maintenance of appropriate quality control procedures. Employees can and do make mistakes and a good translation from one language to another, especially Asian dialects are never infallible. We have all experienced this to some extent when dealing with an outsourced customer service, right? Growth pains are inevitable in any business. Not to mention that wages continue to rise in China, while India keeps workers' wages at a constant level of poverty, while productivity in this country still fails to impress in many sectors .

Can your company afford to wait another month to replace Red Widgets due to a malfunctioning extruder in your Shenzhen, China factory? The fact is, these issues are much more difficult to solve with thousands of miles and up to 20 hours (one way) separating the headquarters from manufacturing facilities. Less language barriers and extreme distances, problems can be detected and corrected quickly, which increases sales and reduces irrevocable brand problems.

See also  How Financing Can Benefit a Growing Business

Manufacturing and inventory problems abroad.

On a large scale, it is impossible to ship goods quickly from Asia to North America, Europe or the United Kingdom. Forget the time spent making real products, shipping is often done by sea to reduce costs. The faster shipping by air can destroy margins and make manufacturing costs abroad prohibitively expensive. People are shopping on Alibaba because they are cheap and ready to wait – and you can not compete with the Amazonian equivalent of Asia.

There is far too much competition for a Canadian customer to wait 4 to 6 weeks for a purple widget. Purple Widgets were rare 10 years ago, but there are hundreds of companies selling them now. A local, national or international business can not sell what it does not have in its possession. This means that if you do not have physical inventory for online and offline sales, with the ability to ship quickly (for example, the night is the current standard in online sales ), you will lose the battle for retailers like Amazon Prime.

-- Advertisements --

<img class="alignnone size-full wp-image-39030" src="" alt=" Manufacturing Abroad Increases Delivery Times and Creates Quality Control Problems "width =" 810 "height =" 540 "/>

You must compete with other customers of the contractor for priority.

Quality and inventory issues aside, you are here and they are there (wherever). How does your company compare with other customers in the manufacturing company? If you sell Widget-flavored energy drinks in India, how do you know that Monster Energy does not work with the same canning or bottling outsourcer that you are?

See also  32% of businesses will use tax savings on employee reward programs

Subcontracted manufacturing costs dollars and cents for all parties involved. If a bigger customer hits your manufacturer with a sudden massive order, or asks for a faster deadline on their products, who do you think they'll choose? Should they appease you, the smallest customer, or ensure the continuation of business with the biggest customer. In the end, someone loses and this could be you, leading to a shutdown of your inventory and a potential increase in quality issues already mentioned because of workers rushing through their work.

Corruption problems.

I can assure you that I am not a cultural fanatic when I mention certain cultures. Corruption is the official tacit rule in China. While in modern North America and in parts of Europe, many have never experienced the racket or the need to "spin the wheels" to start a project, which is the only way to get the job done. is very common in countries where poverty is the norm and wealth the exception.

If a corrupt politician or criminal organization decides to target the factory where your products are made, or to infiltrate a cargo on your way, you can lose everything or have a cargo as a hostage. This does not help to reduce costs. Not to mention the theft of your intellectual property if a foreign company decides to start marketing your products to your customers at unbeatable prices. Do not forget that the laws are different everywhere you go, and a US or British patent may not have weight in the Philippines, and so on.

Here is the real kicker …

As you can see, overseas manufacturing costs can accumulate when the stars do not fit in your favor. One last thing worth mentioning is the fact that you take jobs from your home country and move them elsewhere. Many people would say that it is greedy. However, no matter what label you grant to outsourcing, you actually contribute to raising the unemployment rate in your country.

See also  Healthy employees are happy employees
-- Advertisements --

If you think that's exactly what all the big guys have to do to dominate the markets, think again. Check out this list of 10 US companies that choose to bring jobs back to North America. Obviously, prices to the end consumer must increase when outsourcing is reduced / eliminated. But are they really doing it?

If the need is the mother of the invention, think about what your company would do if it was necessary to keep your manufacturing in the country. As if Donald Trump still held another election promise and imposed import tariffs on countries like China and Mexico?