How Can Offshore Outsourcing Planning Help You?

New strategies are required to win in the global market. Offshore outsourcing planning will make all the difference in your strategy for gaining new business and developing new products. Here are some of the successful plans global companies are using that really work.

By utilizing these ideas, as they fit your unique needs, you can develop a strategy to not only survive in today's extremely competitive international market, but thrive.

Those companies that are flexible and willing to adapt, often discover that entering into the global market reveals new opportunities for growth and profit. Global technology is a reality that can be used to your advantage.

Combine domestic and global technology to win contracts

Very often, plastic injection molding contracts are presented as a "package." This can vary in it's size and structure, but for our purposes, let's use the following example:

Your molding or mold making company has an opportunity to bid on a new product that requires the building of eight plastic injection molds. You already know that other companies are bidding on the job, and they use offshore outsourcing to lower their costs.

Because you have wisely found several reliable, high quality offshore sources for injection molds, you are able to combine your resources to effectively quote the job. You can win in the global market by being flexible and using proven strategies.

Finding such an offshore source can be time-consuming and expensive, if you take it up on your own. The companies listed on this site are all known for their integrity, high-quality and pricing.

Study the chart below to see a real-life example of how this can work. The first column is the domestic price. It is almost certain that you will not win the contract by quoting exclusively domestic prices. The global competition is just too great.

Domestic

Offshore (-35%)

Combination

20,000

13,000

40,000

26,000

50,000

32,500

50,000

80,000

52,000

80,000

120,000

78,000

140,000

91,000

112,000 Joint

180,000

117,000

180,000

117,000

144,000 Joint

810,000

526,500

620,000

The second is an offshore price. The offshore is discounted by 35%, a very realistic amount that ensures a high level of quality. Some Asian companies can discount the cost by 50% or more, but generally the risk is much higher. Most companies are reluctant to have everything made offshore, for good reason.

The third column is a combination of domestic and offshore pricing. This is the strategy that has worked for several companies to win in the global market.

Here is how it has worked for some companies

Because the two lowest cost molds are also the least complicated, the decision was made to go offshore with molds 1 and 2.

Molds 3 and 4 are kept "in-house" for proprietary reasons, and to keep things running smoothly at home.

Mold 5 is chosen to go offshore because it has many features that are connected to the first two molds.

Mold 6 is a joint venture with the offshore mold maker. They make the portion of the cores and cavities that they already specialize in, and you make rest domestically. This resulted in an average savings of 20%.

Mold 7 was made offshore because it also fit their specialty.

Mold 8 was a joint venture similar to mold 6, with an approximate 20% savings.

What was the result?

By using this strategy, the job was won. Because there was a good relationship between the offshore source and the domestic company, communication was not a big problem. The savings were around 23.5%, the quality was excellent and the customer was happy.

As a bonus, new connections were made, the working relationship was strengthened and other companies took notice of this streamlined process and are interested in placing orders. The global market has many companies seeking partners and joint ventures.

None of this would have happened if the company had chosen to put blinders on and attempt to be protectionist and refuse to change. The global market offers endless challenges, but also new opportunities. Offshore outsourcing planning is key to a successful venture. It isn't so much what you do, but how you do it!

Bookmark this page
Reddit Delicious Digg Technorati

plastic injection molding

Click here to get started with 5S!

American Mold Builders Assoc.

"Thank you for contributing your recent articles for our AMBA newsletter. They are well thought out, informative, helpful and written with a no-nonsense, common sense approach."

The Editors of The American Mold Builder, the official publication of the American Mold Builders Association

"Friendly, professional and always willing to help, Randy is an absolute pleasure to work with. His articles are well written, highly informative and relevant." – Clare Swaffer, Assistant Editor, Journal of the Institute of Management Services