All the marketing and manufacturing analysts are pointing towards outsourcing, they are indicating that your best chance in progressing profitably through the next quarter is in contract assembly manufacturing.
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Disadvantages of Foreign Outsourcing
Most companies have outsourced to other countries where labor is more intensive and the delivery and total manufacturing costs seem to benefit them. What you do not know is that quality is a big issue with product reliability and quality, which cannot be assured. In assembly manufacturing, what it takes to produce a product in not only meeting the technical specifications, but the quality of the material, the competence of the workforce in handling and completing composites and designs. The costs associated with warehousing and shipping are normally broken even in the manufacturing process when you outsource from foreign contractors. After quantifying the long term benefits of using such services, you will discover that the profitability will not last since the product will lose local support due to quality issues and reduced capacity for support and after sales service. While the lead-time may be attractive, what you get is a short burst in sales over a period, then costly strategies for diversification of product designs in keeping up with the required profit margins.
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Re-shoring
What we are doing is restoring the original industrial supremacy of the country. Cutting costs and running low cost ventures have become the talk of all assembly manufacturing dependent companies. What is does to the local economy is deprive many of the jobs that they are both competent and qualified for. It reduces their employability factor by a significant value, enough to push the local economy to a downturn, increasing commodity prices and reducing the demand for them inadvertently. It can only be of benefit if you invest locally by contracting your manufacturing processes locally.
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Workforce Competence
The definition of value is in getting what you deserve when you pay for it. It can be hard to make assurances to your consumers when you cannot ascertain competence of the human resource, which plays a huge role in getting the precise design specifications for the parts, the ability to identify structural and composite flaws, the ability to test the composites before shipping, meeting local and international safety standards for both the company and the consumer. These are factors that can only be accomplished through qualification, training and experience, qualities of the workforce you will only find locally.
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Quality of Materials and Process
The other advantage includes the quality of the materials, which meet all the safety and quality codes that are required for all appliances, devices and commodities used locally in protecting the consumer from toxicity, poor quality and safety with use. Extensive testing for all the materials is accomplished before being applied in the fabrication and jointing of parts, which follows precise dimensioning following design specifications. Another advantage you will gain by is the quality of the process, where each stage of the assembly is marked by specific quality checks that are aimed at increasing the quality of the final product with a record low of flaws in mass production.
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Lead-Times
Delivery time is pointless with a flawed product, you would rather take longer to deliver but with assured quality. Inasmuch as that does not appear to be sound business reasoning, think about having the ability to deliver the product just in time, cutting away warehousing costs thought predictable manufacturing times and meeting the demand of the market. This can only be achieved should once have local access to assembly manufacturing. Revisions and product upgrades are easily implemented, and can easily be added to former designs that are still in process. This can give you the flexibility of upgrading designs and correcting flaws in the design with minimum costs.
