NPI China vs. Mexico
Manufacturing Sourcing Comparisons & Guidelines
Manufacturing Sourcing Comparisons & Guidelines
By Neil MacIvor, Principal
New Path International
PDF version
PDF version
Introduction
The purpose of this document is to assist companies when deciding whether to manufacture products in China or Mexico. Both countries have their advantages and disadvantages. Companies must understand their strategic objectives and the importance of each criterion before making a sourcing decision.
The “Sourcing Comparison” includes commonly used criteriaused when selecting a source location. “General Product Sourcing Guidelines" are included to help influence a company’s sourcing decisions. Please note that the “Sourcing Comparison” refers to NPI China. Some of the China advantages are not easily achieved without the capabilities NPI provides.
Sourcing Comparison
Labor + Benefit Cost ($1.25/hr.)
Currency Exchange Rate
Transportation and Duty Costs
Direct Materials Costs
Tooling Fabrication Cost and Cycle Time
Quality Performance
Ownership Risks
Inventory Requirements
Transportation Cycle time (4-5 wks.)
Product Launch Cycle Time
Project Management Capabilities
Engineering Change/BOM Mgmt.
Quote Cycle Time
Communication Cycle Time
Time Zone Differences
IP Protection
Environmental Responsibility
Worker and Engineer Availability
Regional Safety and Stability
Language Challenges
**Advantage
Labor + Benefit Costs ($3.20/hr.)
Currency Exchange Rate
Transportation and Duty Costs
Direct Materials Costs
Tooling Fabrication Cost and Cycle Time
Quality Performance
Ownership Risks
Inventory Requirements
Transportation Cycle time (< 1 wk.)
Product Launch Cycle Time
Project Management Capabilities
Engineering Change/BOM Mgmt.
Quote Cycle Time
Communication Cycle Time
Time Zone Differences
IP Protection
Environmental Responsibility
Worker and Engineer Availability
Regional Safety and Stability
Language Challenges
General Product Sourcing Guidelines
– Small to mid-size products
– High product labor/overhead content
– Mid to high product complexity
– High volume and low product mix
– Timely product launches demanded
– High quality requirements
– Significant engineering support required
– Ownership & personal safety risk concerns
– Large product size
– Low product labor/overhead content
– Low product complexity
– Low volume and high product mix
– Low transportation/duty cost
– Minimal FG inventory
– IP cannot be compromised
– High environmental requirements
Final Thoughts
Sourcing decisions can be difficult. Companies must develop an assessment process to
determine the feasibility of where they source product. Several critical factors often
influence such decisions significantly:
- Product volume
- Market location
- Product cost and complexity
- Transportation & duty costs
- Cycle time and inventory impact
- Communications
- Language and culture
Making sourcing changes to Mexico, China, or other countries can be daunting unless
your company has the in-house experience and skills to handle the complex challenges
of such a move. If your company does not have this in-house expertise, you should
seek external resources for assistance. Many companies have suffered major financial
and market losses when problems arise during this process.
If you have any questions about the content or how NPI can assist in achieving yourmanufacturing objectives, please call me at 614-570-5712 or e-mail me at neil.macivor@npi.com. Our company website is www.npi.com.
PDF version of this article.