Content area
Full text
Low-cost regions play a major role, but they do not have all the answers.
Outsourcing to low-cost regions has had a profound effect on the manufacturing bases of Europe and the Americas. Many products have a relatively high labor content, and if they are to be built in volume the scale of operations in Asia offers better margins. But does this apply universally? Let us explore some other possibilities.
A stable product that does not require much engineering input during its lifetime of manufacture can be successfully built at extremely long range. This does not mean that the product must be simple, and Asian manufacturers are now very capable of building sophisticated assemblies. However, if regular design re-issues occur or if constant process changes are necessary, there needs to be close cooperation between the design team and manufacturing unit. If sound DfM rules are in place, the difficulties abate but do not go away.
When product is built remotely, response times for a design change can have a severe impact on the time to market and can necessitate dispatching a team of designers or engineers to the remote build area. This, of course, increases costs. It may be necessary for an OEM to organize a team of expatriates on rotating shifts - typically two months away followed by two months at home. Unfortunately, this means that the costs of keeping the away team remain high but the effectiveness of the team when on home duty is diluted because they cannot properly tackle anything with greater than two months' duration.
In Asia, the lowest cost sites are being pushed farther afield. In one case, the costs of manufacture on the seaboard of China, near Shanghai, were lower than elsewhere in Asia, but not as much as expected. Chinese authorities offered another possibility which involved building a manufacturing complex complete with airport and hotels in a remote area and...