Deciding to pursue a global contract manufacturing agreement is not a decision that manufacturers should take lightly. While there are inherent risks in manufacturing anywhere, those risks are multiplied exponentially when you send your manufacturing across the globe. So, what are the biggest risks in global contract manufacturing? Here’s a look at seven of the top risks U.S. manufacturers assume when shipping manufacturing around the world
Quality Control
There’s a reason so many companies outsource their manufacturing overseas. It is less expensive than manufacturing in the U.S. However, you have far less control over the quality of your product, when you’re thousands of miles away. This lack of oversight can and often does lead to subpar products.
Supply Chain and Logistics Challenges
The COVID-19 pandemic showcased the risks of global contract manufacturing in a way we’d never seen. As factories and facilities shut down and cargo ships sat in ports for weeks, the supply chain came apart at the seams. No matter the size or stature of a company, its products were not immune from delays in product delivery. Though many problems in the supply chain have since been resolved, the potential for future disruptions is now a serious threat to be weighed.
IP Theft
When you opt to outsource manufacturing to a country across the globe, your intellectual property is at increased risk of theft. Without any direct access or boots on the ground oversight to ensure that your designs, formulas, etc., are not counterfeited poses a greater challenge than if your manufacturing partner was closer.
Shortage of Labor
Lockdowns and shutdowns overseas have led to labor shortages across the globe. When entire regions are closed, your delivery dates and the quality of products manufactured overseas are jeopardized.
Locating the Right Factory or Facility
Selecting the right factory or facility for your manufacturing can also be time-consuming and expensive, due to travel expenses, accommodations, and time spent finding a facility that can produce your products.
Shipping Costs
With fuel prices continuing to drive up manufacturing costs worldwide, all items manufactured overseas will be subject to higher shipping costs, than items manufactured closer to home.
Time Zones/Communication
When you ship production across the globe, you’ll be at the mercy of a time zone that differs significantly from your own. Although this is often more of an inconvenience than a risk, it can pose a risk in an emergency, when your partner needs to speak with you immediately. Worse, it’s a full day’s travel to arrive at the facility if problems need to be resolved.
Nearshore Manufacturing Solves Global Contract Manufacturing Risks
Due to the risks of manufacturing overseas, nearshore manufacturing continues to gain popularity. For example, manufacturing in Mexico is more efficient and reliable than ever. With premium-quality medical device and electronics manufacturing facilities available just miles from the U.S. border, Mexico has become a hub of production in recent years.
Indeed, manufacturing in Mexico also eliminates shipping delays, reduces shipping costs, and allows for greater oversight and quality control, all the while still offering the incentives of reduced labor costs.
Learn More About Manufacturing in Mexico With Coastline International
Coastline International has been a trusted nearshore manufacturing partner since 1982. Headquartered in San Diego, California, Coastline is a privately owned U.S. corporation that specializes in nearshore Medical, Electronics, Aerospace, and Consumer Goods manufacturing in Tijuana, Mexico. To learn more, call 888-748-7177 or send us a message.