Global business opportunities have expanded in the last ten years. As more products become available to consumers, competitive pricing has become more relevant. Outsourcing has been marketed as the perfect solution to lowering costs and consumer prices. Almost every day we read about another company moving its manufacturing facilities overseas. What isn’t apparent is the hidden costs associated with outsourcing; costs that are hard for small businesses to absorb.
Quality control is an important function in any manufacturing process. As Sleek Audio of Palmetto, Florida discovered, flying around the world every month to discuss unresolved quality issues is an expensive task. Without a corporate representative on site to oversee quality, the company has to rely on the contractor’s promises to meet vital quality standards. After poor quality products and delays in shipping, the company has decided to bring the manufacturing process back to Florida. Now facing higher production costs, the company has chosen to focus on quality and customer service over competitive pricing.
Larger corporations have the resources to have full-time representatives overseas, and can afford to absorb some of the costs resulting from products rejected due to poor quality. They produce in much larger quantities than smaller businesses, and benefit from outsourcing by manufacturing products at a lower cost to consumers. The cost of shipping also becomes less per item when shipping in large quantities. Globalization of manufacturing has resulted in lower costs for larger corporations, making it harder for smaller businesses to compete.
Source:
Wired Magazine http://www.wired.com/magazine/2011/02/ff_madeinamerica/all/1
Quality control is an important function in any manufacturing process. As Sleek Audio of Palmetto, Florida discovered, flying around the world every month to discuss unresolved quality issues is an expensive task. Without a corporate representative on site to oversee quality, the company has to rely on the contractor’s promises to meet vital quality standards. After poor quality products and delays in shipping, the company has decided to bring the manufacturing process back to Florida. Now facing higher production costs, the company has chosen to focus on quality and customer service over competitive pricing.
Larger corporations have the resources to have full-time representatives overseas, and can afford to absorb some of the costs resulting from products rejected due to poor quality. They produce in much larger quantities than smaller businesses, and benefit from outsourcing by manufacturing products at a lower cost to consumers. The cost of shipping also becomes less per item when shipping in large quantities. Globalization of manufacturing has resulted in lower costs for larger corporations, making it harder for smaller businesses to compete.
Source:
Wired Magazine http://www.wired.com/magazine/2011/02/ff_madeinamerica/all/1
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