The Benifits and Risks of Expanding Your Offshore Electronics Manufacturing
By: John R. Daly
Electronic manufacturer's face increasing competition; high labor costs, and sluggish growth in some markets. Electronic manufacturers in the United States and around the world are driven by current market trends to expand their markets while reducing the costs of manufacturing.
To assess the customer requirements on delivery, quality, and cost requirements some electronic companies are turning to outsourcing their labor-intensive operations to offshore sub-contractors. In addition, internal company resources and cost limitations restrict the response time to meet key objectives.
Electronic companies cannot always use internal technical resources to develop advanced electronic assemblies or redesign existing assemblies. Offshore manufacturing can refocus in-house company resources to the development of new technology and time to market.
Some companies consider the global marketplace as an economic, governmental, or political issue. To the contrary, the global marketplace is a successful manufacturing strategy. In fact, there is no choice but to follow the policy implications of all manufacturing decisions. Whatever your participation is today your future international participation will be greater.
Driven by customer demands for electronics that are less expensive manufacturers are increasingly moving their production to offshore manufacturing in order to be more cost effective by using these offshore operations either as a component contract manufacturer or as a full service turnkey systems integrator.
Offshore sub-contract manufacturers also offer the convenience of prototyping and production experience, dedicated workers and maintaining a fixed fully burdened labor rate. Electronic manufacturers are taking the benefits of this production strategy and shifting both resources and structuring to overseas manufacturing to enhance their global manufacturing position. The offshore electronics manufacturing strategy is expanding the price difference between foreign manufacturing and state side based production locations; the result is an increased market-share increase relative to the new ability of the electronics company to maintain competitive pricing for the product.
Electronic companies are also taking advantage of offshore manufacturing due in part to customer demands for logistical final assembly concerns. In today's new normal world, a vast majority of completed electronic assemblies are completed at offshore facilities. Logistical considerations are a critical factor in considering offshore manufacturing; an offshore sub-contractor must be able to provide, either internally or externally, a safe and secure warehouse for storage, safety stock, packaging, and product distribution.
Commonality of objectives is an essential operating characteristic that needs prioritization before any obligation to move forward with offshore manufacturing. To add clarity to the above statement, you must make sure the sub-contractor understands that the prevailing manufacturing and quality requirements are maintained at all stages of the manufacturing process. Cohesion of both sales and engineering objectives provides the best option for controlling costs, ensures efficiency, and maintaining customer satisfaction.
Electronic manufacturer's face increasing competition; high labor costs, and sluggish growth in some markets. Electronic manufacturers in the United States and around the world are driven by current market trends to expand their markets while reducing the costs of manufacturing.
To assess the customer requirements on delivery, quality, and cost requirements some electronic companies are turning to outsourcing their labor-intensive operations to offshore sub-contractors. In addition, internal company resources and cost limitations restrict the response time to meet key objectives.
Electronic companies cannot always use internal technical resources to develop advanced electronic assemblies or redesign existing assemblies. Offshore manufacturing can refocus in-house company resources to the development of new technology and time to market.
Some companies consider the global marketplace as an economic, governmental, or political issue. To the contrary, the global marketplace is a successful manufacturing strategy. In fact, there is no choice but to follow the policy implications of all manufacturing decisions. Whatever your participation is today your future international participation will be greater.
Driven by customer demands for electronics that are less expensive manufacturers are increasingly moving their production to offshore manufacturing in order to be more cost effective by using these offshore operations either as a component contract manufacturer or as a full service turnkey systems integrator.
Offshore sub-contract manufacturers also offer the convenience of prototyping and production experience, dedicated workers and maintaining a fixed fully burdened labor rate. Electronic manufacturers are taking the benefits of this production strategy and shifting both resources and structuring to overseas manufacturing to enhance their global manufacturing position. The offshore electronics manufacturing strategy is expanding the price difference between foreign manufacturing and state side based production locations; the result is an increased market-share increase relative to the new ability of the electronics company to maintain competitive pricing for the product.
Electronic companies are also taking advantage of offshore manufacturing due in part to customer demands for logistical final assembly concerns. In today's new normal world, a vast majority of completed electronic assemblies are completed at offshore facilities. Logistical considerations are a critical factor in considering offshore manufacturing; an offshore sub-contractor must be able to provide, either internally or externally, a safe and secure warehouse for storage, safety stock, packaging, and product distribution.
Commonality of objectives is an essential operating characteristic that needs prioritization before any obligation to move forward with offshore manufacturing. To add clarity to the above statement, you must make sure the sub-contractor understands that the prevailing manufacturing and quality requirements are maintained at all stages of the manufacturing process. Cohesion of both sales and engineering objectives provides the best option for controlling costs, ensures efficiency, and maintaining customer satisfaction.
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