Some don’t like to admit it, but outsourcing work to overseas companies has long been one of the ways companies save money on manufacturing. Unfortunately, in the effort to cut costs, many businesses have found that going abroad to outsource work comes with significant risks and disadvantages. The benefits of reshoring contract metal stamping partnerships often outweigh the potential cost savings of outsourcing jobs for cheap labor.
The primary reasons for reshoring include consistent product quality, improved brand image, dependable supply chains, and more. As you weigh the pros and cons of reshoring your outsourced contract metal stamping, you may find it helps to consider all of the potential risks of outsourcing.
Disadvantages of Outsourcing Contract Metal Stamping Overseas
Most of the risks of outsourcing your contract metal stamping are caused by distance. Even as technology brings the world closer together, it’s still harder to do business with someone on the other side of the world. The physical and cultural divide causes problems in all of the following ways:
1. It’s harder to control quality. Offshore metal stamping operations have low prices for a few reasons, but one of the big reasons is that they often turn to untrained, unskilled workforces. The low wages don’t attract experienced professionals (or even employees who feel dedicated to the work). Products and supply chains suffer as a result, and it’s hard to stay on top of things from thousands of miles away.
2. Communication breaks down. The rise of new technology can only help so much with cultural differences and language barriers. You might need to hire translators for both oral and written communication. You might be surprised by the cost of expert translators, but you can hardly afford to entrust legal contracts and technical documents to anyone less experienced.
3. Time zone differences disrupt productivity. Even if you manage to build rapport, collaboration remains challenging when there is little overlap between work days. By the time you learn about the latest problem, there might already be delays rippling through the supply chain. Try to overcome this issue with atypical work hours or a global workforce, and you’re opening the door to an entirely new type of management headaches.
4. Your intellectual property is at risk. Product designs and manufacturing IP might be well protected here in the United States, but that isn’t a global standard. Even if you take the time to register patents in China, your raw materials and production methods might not be covered. If you trust the wrong factory to produce your product, you might soon find something uncannily similar selling for lower prices under a different name.
5. Global operations are susceptible to global problems. Trade wars, natural disasters, global pandemics, and other situations become a lot more threatening when your supply chain has to reach all the way around the world. A trade war with China or a blockage in the Suez Canal can’t hurt you if your product ships from the middle of the United States.
6. Outsourcing can damage your brand. Quality control problems and supply chain inefficiencies are already great reasons to replace your supplier. Even if the product is fine, though, many customers will lose faith in your brand if your supplier is linked to a scandal involving poor work conditions, environmental abuse, or other ethical violations.
7. Outsourcing is unpredictable. Your order cycles and lead times will be longer regardless, and any additional delay is amplified, leading to unhappy customers. Even the costs might not be what you originally hoped once you iron out the details in your supply chain, hire the necessary experts, and pay the added fees or taxes associated with importing.
Advantages of Reshoring Your Contract Metal Stamping
When you bring your contract metal stamping home, you’ll eliminate many of the risks associated with outsourcing to another country. Your technology and process will be protected, turnaround times are quicker, and overall quality is much higher. It’s easier to keep an eye on every aspect of the process, from general product quality control all the way down to how your partner protects your tooling investment.
As your supply chain gets shorter, you’ll experience reduced lead times. You can therefore reduce your inventory with confidence, lowering your exposure to carrying costs and stock-outs. Uncle Sam will help you keep an eye on the production process, too, as the USA has relatively comprehensive laws related to all of the following:
- Quality assurance and product standardization
- Working conditions
- Environmental protection
- Protection of intellectual property
One of the most surprising benefits of reshoring is that it opens the door to different ways to cut costs. You can expect to sink much less time and money into logistics. Your travel costs will go down, too, as you might need less oversight, and you won’t have as far to go when you do make the trip.
Finally, your brand becomes stronger. Public opinion is harder to measure than monetary cost, but it will eventually have an impact on the bottom line. Your marketing department and sales teams will thank you for giving them the opportunity to talk about lowering your carbon footprint, creating American jobs, and sourcing your parts locally. 83% of people surveyed are willing to pay up to 20% more for products produced domestically.
Challenges of Reshoring
Though returning your contract metal stamping to the United States provides many benefits, not every domestic partner will necessarily be the appropriate choice for your needs. If you can’t find a partner with sufficient technical expertise, your attempt to do the right thing may backfire. Of course, the bottom line is still the bottom line, and you will always be tasked with finding a cost-effective solution that provides enough value to generate ROI. Choosing the right manufacturing partner is paramount, and a true expert in the industry will be able to demonstrate what you gain by reshoring. At LMC Industries, our core competencies include collaborative engineering services, customer service, and reliable delivery.
Ready to Reshore Your Contract Metal Stamping?
When you’re ready to bring your metal stamping services back to the United States, we can help. Located near St. Louis, Missouri, LMC Industries is almost directly in the center of the country. From this location, we’re prepared to simplify your supply chain and minimize turnaround times. Contact us today to learn how we can protect your quality, process, and reputation with quality metal stamping services.