Manufacturing is the part of a company’s process that cannot be taken lightly. A lot of decisions need to be made for the manufacturing process to be effective and cost-efficient. One of those decisions is deciding whether to manufacture at home or to outsource the process overseas.
Both options offer their advantages and disadvantages. To help you determine which is best, we are going to take a closer look at the two options in this article.
Manufacturing at Home
One of the biggest advantages of keeping the manufacturing process in-house or at home is the time you can save. You don’t have to ship raw materials to a factory in a foreign country and you don’t have to ship the finished goods back to your warehouses for further distribution. Cutting these two elements out of the manufacturing process saves a lot of time and money.
You also get to brand your product as “Made in the United States” which is a prestigious component of any brand. That label alone can help you gain traction in the marketplace, especially in an economy as sensitive as today. Despite the recent uncertainties, US-based manufacturing companies are still known for their attention to quality.
On the other hand, you miss out on the enormous cost savings in labor, overheads, and other sectors of the manufacturing process. As a result, you may have to sell your goods at a higher price.
The process of moving your manufacturing overseas is a lot easier than you think. When you want to move manufacturing to Mexico, for instance, you can now use the maquiladora program to gain some instant advantages. Maquiladora means mirroring, a process of establishing your own manufacturing line or factory in Mexico.
The program itself comes with tax credits and incentives. The Mexican government is appreciating the investment you make by offering tax cuts and other financial advantages. You can even get the land you need to build a factory for free, in return for hiring local workers.
Labor is another factor to take into account. Labor costs in Mexico are significantly lower, which means you can lower the production cost of your goods substantially. The lower cost translates to a more competitive product on the market, which could easily add up to a higher chance of success.
Which Option is Better?
The answer depends on the kind of products you manufacture and the market you are in. As mentioned earlier, a “Made in USA” label can be an important asset for certain products or companies. Lower cost and better flexibility, on the other hand, are more important to others.
You have to weigh the advantages and disadvantages of these options and find one that fits your company best. In most situations, however, outsourcing your manufacturing to countries like Mexico gives you the most advantage at a relatively small cost. After all, most of the challenges associated with outsourcing are challenges you can tackle easily with the right resources and a good manufacturing strategy.