The Great Unknowns of Offshore Manufacturing

It is well known that sourcing just about anything from Asia comes with a large cost advantage; however, what about the risks? Let's take a quick look at some of the well-known and lesser-known risks of offshore manufacturing.

Quality

The first and more well-known tradeoff when it comes to outsourcing is quality. We have all experienced the less than stellar quality of cheaply manufactured imported products. Magnetics are not isolated from this either. Poor connections, lack of testing, and faulty materials are not uncommon.

Inconsistent

One of the lesser-known facts about overseas manufacturers is the factory you contract with is not always the factory that fulfills your order. Foreign manufacturers have been known to outsource orders to other factories of lesser quality. This can mean the quality of one order to the next can be vastly different in terms of quality consistency based on who actually fulfills your order.

Turn-Around Times

Aside from production time, shipping from Asia can take 4-5 times longer than domestic shipping. The cargo ship trip alone can take 35 days from somewhere like Shanghai to New York. This doesn't take into consideration freight forwarding from the factory to the originating port nor the logistics between the destination port to your final destination. If there is a problem with the order, the whole cycle will start over again unless you opt for air freight (which isn't cheap for something made of copper and steel).

True Cost

Many purchasers neglect the additional time and cost of freight forwarding. The cost of the forwarding for even a short distance can often be as much as the ocean freight. You will also need to consider the cost of customs. Today, transformers manufactured in China are subject to tariffs. Don't forget about dock fees, the freight forwarder administration fee, security fee, and customs clearance fee. This all adds to the overall cost of the project. This may work at quantities of scale but not in smaller production runs.

The Unforeseen

Overseas logistics can be tricky, and getting it wrong can be extremely costly. A misstep in the process can result in your product getting held up at the docks for weeks, and yes, there will be fees involved. Time at the port is costly, and like the post office, they won't hold your products forever. The Bill of Lading, customs, and proof of payment of the supplier and freight company are just some of the hoops you will be required to jump through. Assuming you get this right, your product can still be subject to costly delays from weather, customs, or even labor strikes.

The Best of Both Worlds

At Pacific Transformer, we have developed a tried and true hybrid manufacturing approach that solves all of the discussed offshore sourcing problems while still providing you with overseas pricing.