The attractiveness of offshore manufacturing is beginning to wear off as more OEMs and businesses see the benefits of keeping production, assembly, and fulfillment geographically closer to their customer base. Overseas manufacturing has a few advantages but a longer list of disadvantages. From communication barriers to unreliable supply chains, offshore manufacturing often yields less than ideal outcomes including production slowdowns and decreased profitability.
Forward-thinking manufacturers and businesses seeking an alternative production solution can leverage local contract manufacturing to maintain a stable supply chain, a steady workforce, and a more consistent revenue flow.
3 Reasons to Work with a Local Contract Manufacturer
It’s a common misconception that local manufacturing is costlier than outsourcing assembly overseas. While offshore manufacturing offers some cost savings, local manufacturing can be just as cost-effective and in some cases even more so.
From reduced fulfillment costs to shortened lead times, here are three reasons why OEMs and businesses should partner with a local U.S.-based contract manufacturer.
1. Reduce Fulfillment Costs
International shipping costs have increased exponentially over the past several years and are continuing to rise due to the COVID-19 pandemic. A combination of factors including a trade surplus, disrupted supply chains, and a critical shortage of shipping containers has caused international shipping costs to skyrocket by 300%. Desperate companies have to wait weeks for shipping containers and pay premium rates to get them, forcing companies to pass the extra costs on to consumers.
Local contract assembly services allow manufacturers to bypass the surge in international shipping costs. OEMs and businesses can save significantly on inbound and outbound delivery and shipping costs by reducing the amount of money spent on:
- Shipping insurance
- Jet/ocean liner fuel
- International taxes
- Customs fees
The ability to keep shipping costs low with less overhead allows businesses to maintain their product pricing in a time of instability. Low or consistent product pricing keeps customers delighted, loyal, and more likely to buy again in the future.
2. Implement Clearer Lines of Communication
The potential cost benefits of offshore manufacturing are often negated by language barriers. One of the greatest benefits of working with a local contract manufacturer is the ability to bypass language barriers and implement clearer lines of communication. Choosing a domestic contract assembly service minimizes the risk of miscommunication, helping to avoid costly production delays.
Another challenge of offshore manufacturing is the time difference. Businesses have to spend extensive time scheduling in order to meet with a contract manufacturer who is 10 hours ahead or behind, which can greatly impact time to market. Working with a local contract manufacturer provides businesses the flexibility to meet in person or quickly schedule a phone conversation in their time zone.
3. Stabilize Supply Chains
The ongoing pandemic has made it immensely difficult to assemble and procure parts overseas due to supply chain disruptions, lockdown protocols, and long shipping delays. According to the Institute for Supply Management (ISM), around 4,200 supply chain disruptions were reported in just the first 9 months of 2020 – a 14% increase from all of 2019. A break in a business’s supply chain can have a devastating ripple effect on a company’s bottom line.
Many local contract manufacturers procure resources from other local companies. This reduces lead times on materials as they do not have to wait for resources to ship overseas. Domestic contract manufacturers can also avoid supply chain disruptions related to customs inspections and tariffs, further stabilizing supply chains for OEMs and businesses.
A Reliable Local Contract Assembly Service for Your Business
The pandemic has accelerated the need to transition away from offshore to local, U.S.-based contract manufacturing. OEMs and businesses that want to avoid the rising costs of international shipping and continual supply chain disruptions should partner with a qualified and experienced domestic contract manufacturer. When businesses choose a local partnership, they can grow their profits sooner, save more money, and support their local community.
