SigmaTron Source Q1 2020

Sigmatron First Quarter 2020

This quarter’s issue looks at SigmaTron International’s COVID-19 policies. As of the time of publication, all facilities are operational. Equipment investments in the Elk Grove Village, IL facility, warehouse moves and investments in Texas, and continuous improvement activities in the Tijuana, Mexico facility are also discussed. Read the full issue here.

Considering Outsourcing in Mexico?

Is Mexico Right for Your Project_

The last few years have challenged every supply chain manager’s ability to craft a successful outsourcing strategy as perceived advantages have shifted due to tariffs, changes in tax policies, new trade agreements and unanticipated supply chain disruptions.

There are some universal truths relevant to outsourcing at a distance:

  • Transferring a project incurs significant measurable costs plus difficult-to-predict costs such as new supply chain learning curve inefficiencies, added staff time and travel, and the cost of any unanticipated quality or product delivery delay issues resulting from the transfer
  • Regional supply chains tend to be optimized for the product types and volumes most common in the region
  • Selecting locations based on labor cost alone increases the risk that cost advantages may not be sustainable
  • Lower volume project support costs often exceed the cost savings of moving to a lower cost labor region
  • Selecting an offshore contract manufacturer with a bid far lower than the rest of the contract manufacturers in the region may result in quality, delivery timeliness or scope of support surprises.

Mexico offers significant advantages to companies looking for offshore pricing and logistics simplicity. However, it is not universally advantageous for all projects. This whitepaper looks some key issues that should be considered when evaluating the viability of outsourcing in Mexico, and suggests issues to consider when evaluating Mexican contract manufacturing options.

Read the full paper here.




Re-evaluating Your Outsourcing Strategy?

Re-Evaluating Your Sourcing Strategy_

The last few years have seen shifts in the cost structure of the global playing field that will likely continue for several years to come as new trade agreements are implemented, and tariff and tax policies change. These changing cost structures have driven re-evaluation of outsourcing strategies, particularly in cases where the primary advantage of a specific location is related to labor costs. When engaging in re-evaluation, it is important to recognize that every region has advantages and disadvantages that will continue to change over time. For that reason, it is important to look at the sustainable advantages of desired regions and contract manufacturing partners. For example, choosing a contract manufacturer skilled in engineered cost reduction with facilities in a low cost labor region in close proximity to the product’s end market provides three cost advantages: contract manufacturer cost reduction expertise, location cost advantages and logistics simplicity. Consequently, an increase in labor cost will not have the same level of negative impact that it would if regional labor costs were the only advantage related to selection of a contract manufacturer in that region.

SigmaTron International sees these types of outsourcing strategy evaluations occur regularly in its customer base and works with its customers to help them better understand their options. Choosing a contract manufacturer able to flexibly support changing requirements saves money and helps ensure superior quality. This whitepaper looks at four areas to audit in determining whether a contract manufacturer is likely to be a good long-term fit. Read the full whitepaper here.



Lean Manufacturing and Superior Product Quality

Contract manufacturing is a form of controlled chaos because most facilities have at least 30 different customers with differences in product technologies, preferred vendors, process specifications and demand patterns being manufactured in the same production area. SigmaTron International incorporates Lean manufacturing philosophy and core tools in its operations to bring discipline to the variation otherwise driven by customer diversity. Our latest whitepaper looks at the ways Lean manufacturing principles contribute to product quality and provides specific examples of ways SigmaTron’s team is using these principles to deliver superior quality. Read the full whitepaper here.