North American manufacturers can compete against their low-cost labor competitors in China, India, etc. American factories can offer higher quality, reduced time to market, and are more prepared to make quick changes to their production line to take advantage of new market opportunities. The challenge for American manufacturers is in investing in their operations to encourage their customers to recognize their viability.
Investing in automation to increase factory efficiency is the surest alternative to outsourcing production. By investing automation, production costs are greatly reduced and your plant can compete with the outsourced plants. Your customers may believe that, to remain completive themselves, there is no choice other than Asia. But if you invest in automation, you can challenge Chinese manufacturers on a total-cost basis, and even challenge their cost per unit.
Competitive Advantage of Automation
It is no longer enough for your final products to have lower prices. For example, consumers no longer see quality as a selling point. They demand it in everything they buy, and the low-cost labor base manufacturers in Asia cannot guarantee that their products can meet the stringent specifications their customers demand.
It is just as important to be fast. By automating, many companies have lowered lead times from weeks to days and hours. Outsourced manufacturers use low cost labor as opposed to efficient manufacturing practices. This means increased lead times and with transportation of final product to America taking over a month, longer time to market. Indeed, many companies have found that they are not satisfied with the quality and delivery times of their outsourced operations. Some have even decided to move their own manufacturing back to North America.
Alternatively, automation can cut days and weeks out of your production process. Whereas outsourcing parts of your production increases lead times, automating will increase production line efficiency, reduce cost per unit, and offer your factory the flexibility to respond quickly to any changes your customers may request.
The Value of Investing
By investing in your factory, you can maintain annual sales growth through your primary strength as a North American factory: overall customer satisfaction. The outsourcing vs. automation debate has shown that wise investment encourages your company's viability. Longterm growth depends on investing in a long-term solution. Foreign low cost labor may appear attractive to shareholders, but the viability in your market place can only continue to be encouraged with strategic investment.
Save Your Factory has a list of resources to show how investing in automation has helped North American companies continue to grow. Go to our Viability section for Intelligence reports that show real companies that are flourishing in North America due to their automated production processes. Before you decide to outsource, consider building on the strengths of your factory. Contact us to learn how.
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