Once a board design reaches the stage where it can be manufactured for market, it’s time to decide where to have this done. Finding a good partner to outsource the work to is an important next step in the process. Using low labour costs as the main driver to choosing a partner may not always be the best option; there is more to the debate when deciding where to outsource your manufacturing work.
The debate on onshoring/offshoring manufacturing work has become a more frequently discussed topic as a result of the on-going effects that Coronavirus and Brexit are having on the market.
The fragility of offshore supply chains has been highlighted in 2020/2021, prompting many design companies to consider bringing electronics manufacture back to the UK and explore supply chains that have previously been overlooked. The advantages to manufacturing electronics onshore include:
• Keeping intellectual property close to home
• More manageable shipping costs and shipping lead times
• Easier collaboration with supplier (language and time zones)
There are of course advantages to offshoring manufacturing work, not least that the material supply chain is predominantly located in Asia, leading to a larger, more accessible ‘local’ supply chain to source raw materials from often at a lower cost. However, onshore kitting firms utilise a large network of well-established UK suppliers that can often tap into this offshore supply chain to obtain equally good pricing on a large range of electronic components.
It is worth considering that year on year, the offshore manufacturing wages increase while the productivity of domestic manufacturing continues to improve. There are regular commitments of support from the UK government. £300 million was announced to boost manufacturing productivity in Sept 2020, with many UK manufacturing firms now looking to invest in technology and improve or expand their business.
Mitigating the risk of intellectual property theft is an important factor when weighing up the onshore/offshore options. The UK and EU have much tighter privacy and patent laws than many offshore manufacturing locations. Having spent many hours designing, manufacturing, testing and developing your product, it is very disappointing to then see a cheap copy of it available to buy. This could result in a complicated legal battle or struggling to compete in the marketplace.
Quality is another driving force in determining where to have your product produced. Collaboration with offshore manufactures is inherently limited with cultural differences and language barriers potentially leading to miscommunication, misunderstandings and costly mistakes or delays. In addition to this, time differences with overseas manufacturers can limit the coordination required for a complex manufacturing project.
Volume of production may also influence the decision to choose onshore or offshore. There are notable savings for large-volume PCB production runs, which offshore facilities are optimised for dealing with. Smaller volume runs and prototypes are less likely to be good value for money when taken offshore as the manufacturing facility is unlikely to deviate from their volume manufacture practices and will often implement minimum order quantities. Additionally, the expense of essential supervision or auditing visits from domestic staff can quickly wipe out any financial gain. Any issues with a more ‘local’ manufacturer can be quickly resolved to ensure a high quality product is manufactured to the exacting specification required.
If your company is preparing to outsource a new electronics project and is struggling to decide whether to onshore or offshore the work, please get in touch with HGL Systems to discuss your requirements. HGL Systems can help determine which option will better suit your project as we are able to broker work offshore as well as manufacture onshore