Benefits of Domestic Manufacturing vs. Offshore Sourcing
Over the past few decades, many American companies chose to use offshore manufacturing as a way to reduce production costs. Parts, components, and often entire products have been manufactured by offshore sources and sent back to the U.S. for distribution and sale. In years past, overseas production was an effective cost-saving method, but, more recently, rising costs, quality issues, and other concerns have led to the “reshoring” of much manufacturing.
Domestic manufacturing provides numerous benefits over offshore production, including, but not limited to:
Competitive Production Costs
Formerly, the cost savings in overseas manufacturing was tied directly to the low wages workers were paid. In recent years, however, the average workers’ wage abroad has been increasing by 18-20% per year. Add to that the ever-increasing costs of transporting materials to and finished parts or products from international locations, and the cost savings of overseas production quickly vanishes. Domestic manufacturing may still cost a bit more in some cases, but the additional advantages (see below) more than make up for any cost difference.
When using an offshore source, quality issues may not be noticed, addressed, and/or corrected in a timely fashion, if at all. High quantities of products may be produced with major flaws or defects that the manufacturer may not even realize are there, because the company and project managers behind the products are thousands of miles away and can provide no direct oversight or testing. In short, distance makes close collaboration extremely difficult.
Working with a domestic manufacturer makes it far easier to ensure your quality expectations are met. Prototypes and samples can be shipped back and forth for inspection, testing, etc., much faster. The time difference will be only a few hours—rather than eight, ten, or more for overseas sources—making it easier and more convenient to call the manufacturer on the phone to discuss any quality issues.
Quick Response Time
Similarly, domestic production offers the benefit of far faster response times than offshore manufacturing can offer. Because time to market is often critical, questions and concerns generally need to be addressed as swiftly as possible. A delay of even a few hours can lead to major issues that affect the entire project further down the line. Working with someone who is at least on the same continent makes communication much easier.
Proximity also makes shipping and transportation far quicker (not to mention less expensive). This can be a major boon to your project if you’re still in the prototyping stage. Prototypes can be delivered overnight, if needed (or faster, depending on the manufacturer’s location), instead of taking several days to arrive (or longer, depending on the manufacturer’s location), allowing you to enact design changes more quickly and helping you reach your final design faster. In that same vein, if you find that your final part or product needs design tweaks from one batch to the next, for whatever reason, you can more easily communicate this with the manufacturer and test your modified design more quickly to ensure that the proper fit, form, and/or function has been achieved before starting the next production run.
In general, domestic manufacturing offers greater flexibility than overseas production. Domestic manufacturers can easily accommodate smaller production runs; while offshore sources may also be willing and/or able to produce lower quantities of your parts or products, the shipping costs can be prohibitive.
Domestic production is also far better suited to just-in-time requests. An overseas manufacturer may be able to produce a rush order quickly, but getting the product to you in time to meet your schedule may prove difficult or impossible. With a domestic manufacturer, even if the turnaround time on the products is a bit longer, the time in transit will be far shorter.
Using domestic sources also gives you the flexibility to find the right company for the job, especially if your parts or products require specialized production capabilities. An offshore manufacturer may offer the processes needed to produce your products, but that doesn’t necessarily mean they’re good at them. Domestic manufacturing makes it easier to find the specialist(s) you need to get the job done right the first time.
Intellectual Property Security
Depending on your industry and your product, the security of your intellectual property can be a major concern. While it’s not necessarily a common occurrence, offshore manufacturers have been known to reverse-engineer the products they’re making for other companies and use the ill-gotten designs to produce their own version. No one wants to compete with a cheaper version of their own product!