White Papers/Technical Papers

Improved Product Design Practices Would Make U.S. Manufacturing More Cost Effective
A Case to Consider Before Outsourcing to China

In the global marketplace today, more and more companies are looking to China for both assembly and manufacturing. Drawn in by the lure of extremely low labor rates, U.S. companies are eager to rapidly move manufacturing and assembly offshore. These companies seem very interested in reducing manufacturing costs, but many of them rarely take the time to understand the significant potential for cost savings during the design phase of their products.

Why is this so? Product development methodologies such as Design for Manufacture and Assembly (see Appendix) have shown repeatedly over the years that most of the cost of a product is fixed during design. The best time to find cost reductions, then, is during the design stage, not during manufacturing.

The question has now become: Is sending a product design overseas for manufacture really the cost-effective solution, or would U.S. companies benefit from taking the time to redesign products and keep manufacturing here?

In this paper, we examine some of the hidden costs of outsourcing that U.S. manufacturers may not be taking into account. To illustrate our claim that product redesign could be a cost-effective alternative to outsourcing, we offer two case studies that quantify costs associated with manufacturing and assembling products in China.

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