Updated: Sep 29
Offshoring manufacturing has become a staple of countless industries. By outsourcing manufacturing overseas, companies are able to save significant expense on materials, labor, and machinery, while removing the need to set up expensive factories in-house. Chinese factories are set-up to handle huge manufacturing orders and have thus been able to implement a large number of protocols and systems to ensure efficiency, speed, and low-overheads.
Thus, a huge proportion of products in any given American household are likely manufactured in China or other foreign countries. That American flag hanging on your wall? It was probably made in China!
This set-up has worked well for businesses for decades, but that’s largely because there hasn’t been a better option. Offshoring is certainly not perfect, and that’s why more and more companies are now making the switch to nearshoring. In this post, we will discuss the benefits of nearshore manufacturing in Mexico, versus offshore manufacturing; and what it could mean for your business!
The Trouble With Offshore Manufacturing
So, what are the issues surrounding offshore manufacturing? Offshore manufacturing means that the most critical part of your business – the part where you actually create the product – are being handled in an entirely different continent.
Likewise, this means that your inventory once produced is also situated on the other side of the world. If you have a huge order of goods, then you are entirely dependent on the efficiency of that factory (which you have no way to oversee), as well as a smooth and problem-free delivery. The unfortunate reality is that these are things you simply can’t rely on.
Assuming everything goes smoothly, you still have to deal with a slow delivery time (which harms the overall user experience for your customers), you still need to pay a lot of tax and duties, and you still need to deal with potential language barriers and other issues during communications.
When things don’t go smoothly, this is where the real problems emerge. Now you may find yourself dealing with a missing shipment that could be anywhere between the US and China, and working with multiple different businesses (from freight forwarders to carriers to customs officials) to find where the products are and what went wrong. Should there be Quality Control (QC) issues with the manufacturing, you will face a significant uphill struggle to deal with this: visiting the factory in-person would consider a significant investment of time and money and a long journey.
Many of the same issues arise when you consider things like everything from making tweaks to your design, to discussing cost-cutting strategies is made more difficult when you’re dealing with a company that is located across the globe, speaks an entirely different language, and has drastically different approaches to business.
Nearshoring in Mexico
This is where the solution comes in: nearshoring in Mexico.
Nearshoring means that you are still handling manufacturing off-shore, but just a nearer shore. This gives you all the same advantages as using Chinese manufacturing, but with none of the drawbacks.
For one, you will experience simplified communication. While Mexican businesses may speak Spanish as their first language, most professionals will speak English extremely fluently. Not only that, but with a much closer time zone, it becomes significantly easier to arrange meetings and calls. That means you can get in touch quickly in an emergency (rather than waiting for that part of the world to wake up) and it means that you can avoid missing meetings or being forced to work outside of office hours. The end result is that your business becomes significantly more agile, responsive, and effective.
Supply chain stability also improves massively when nearshoring. That’s because you’ll have far less distance to send products, meaning that you can reduce delivery times for customers (leading to better results and user experiences, and therefore more positive reviews and sales!). What’s more, is that if products go missing, you can track them down far more easily, and you can also get replacements to customers far more easily.
While visiting these companies still involves a trip overseas, it’s also much easier to do compared with travelling to China. You’ll thus save money and time, and generally find that you are more inclined to check in on the manufacturing process.
Why Mexico? Why Now?
Hopefully this post has showed you that Nearshore manufacturing is the right move for you.
But why Mexico specifically? And why now? There are several answers to this question.
Firstly: Mexico is a great choice because it offers all of the features you need for any offshore manufacturing operation. That means:
· High level of technical skill
· Excellent equipment and resources
· Low cost
· Excellent proximity to the USA
· Large number of English-speakers
· Similar timezones
By switching manufacturing to Mexico, you will reduce delivery times and costs along with taxes and fees. You’ll be able to more easily get in touch with the professionals handling your manufacturing at a time of day that suits you, and you’ll be significantly more responsive, agile, and resilient.
As for why now is the right time to make the switch, the answer is that the sooner you make the switch, the sooner you start saving money and better serving your customers. That said, this is a particularly excellent time to make the transition. With momentum swinging from the impact seen early 2020, more and more consumers are ordering products online that they need with rapid turnaround times.
Alongside this, traveling long distances is becoming increasingly more difficult, and we are facing more disruptions to fulfillment than ever before. Although the outsourced manufacturing business will return to normal in the near future, the current shift of focus to nearshoring operations in Mexico will bring more attention than ever to it. As it grows, it will be the new staple for business owners looking into utilizing these services and be ideal to stay competitive.
All of this has illustrated extremely clearly the importance of keeping manufacturing close to home and having easy access to seamless communication.
And we’re not alone in thinking this. In fact, research shows that 46% of sourcing executives predict that offshoring will increase significantly in the coming years. This is a trend that simply makes sense for countless businesses – and that most likely includes yours. It’s time to bring manufacturing a little bit closer to home, and to enjoy the countless benefits that come from that!