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.