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Should I Have My Product Made Offshore To Get A Lower Price?

Written by Christopher Bray on 03-24-2020 in Risk Reduction.

Right now due to the Coronavirus, American Companies are learning a hard lesson when it comes to supply chain.  Many companies are struggling with backlogs on parts that were being manufactured in China.  So in this post, I want to address the entrepreneur/start up since the decisions you make regarding supply chain could have a huge impact on your success.

As a design group that specializes in manufacturing, we work with a lot of clients that rely on our help to identify the right partners to supply parts and do assembly.  Many times, these partners are injection molders.  The most popular question we always get is, “Won’t it be cheaper to make it overseas?”.  As usual, the answer is it depends.  When you’re first starting out, you need to think about not just part or tooling cost, but also shipping, quality, and risk to your supply if something goes wrong.  In an effort to help you consider these things, here are some guidelines to go by:

  1. If your product is made of smaller parts with a lot of assembly, then yes, overseas supply is an option you should consider.
  2. If your product is larger and involves less assembly, you should look locally for suppliers.
  3. When building molds for injection molded parts, consider family molds if the part design allows so your tooling cost will be less expensive.
  4. If you have a higher volume product that will get into the hundreds of thousands or even millions of parts shipped every year, consider having 2 smaller cavity molds made instead of one larger cavitation mold.  This will provide you a redundant supply of parts in case one mold breaks or needs maintenance.  Your final part price will be a little higher, but the risk mitigation is worth it in the end so you don’t run out of parts.
  5. During product launch, understand there will be communication issues if you choose an overseas supplier.  This could lead to delays, or even worse, your tool gets made incorrectly which can lead to a significant delay in getting your product to market.
  6. Make sure whoever your supplier ends up being, they have a robust engineering department with CAD capabilities so they can make final part design/tooling changes if necessary.  This will shorten your lead time.
  7. If you need a contract manufacturer that can both mold and do assembly, make sure they are qualified to do your particular type of product.  Ask them to show an example of current products they manufacture.
  8. Make sure your supplier understands your quality requirements and has a plan for how they will make sure your product meets specifications.

This is not an exhaustive list, but these are some things to keep in mind as you decide whether or not you source locally or choose to go overseas.  

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