A reader has suggested asking for feedback from blog readers about their experiences doing business in China. Done right, outsourcing manufacturing offshore creates some real potential for cost savings. But we've also heard anecdotally about how the "savings" sometimes can be erased by higher costs for telecommunications, travel, lead-time delays, quality issues, reworks and shipping expenses. Have any companies moved business overseas and found that the decision cost them money? Do you have firsthand experience? The reader who suggested this item knows second-hand about an OEM that "lost tens of thousands of dollars every time a team had to visit China to straighten out problems. It would take weeks to ship first runs, communicate errors and changes and then get more part samples. Ultimately there would be one or more visits per project. Vendors changing designs, substituting parts, and changing specs were common. Not to mention how these vendors would then mold parts for local sale." The amazing part of the story is that the OEM was approving projects without taking any of these extra costs into account. This particular company, a well known plastics processor, did not have sophisticated MRP (material requirements planning) rules for new products, and never really audited the real costs of moving production offshore. I look forward to reading about your own experiences in our "comments" section.
Doing business in China
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