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Offshore Manufacturing

Many companies are now choosing to have their products manufactured in lower cost geographies. When selecting a location and vendor for offshore manufacturing we would suggest you consider the following factors-


How do you intend to communicate with the third party supplier? Do you intend to have people on site who speak the language? Verbal communication followed up by a written format such as e-mail works well. Even better, install a FTP secure connection.

Corporate Social Responsibility

Go and audit your selected partner(s). Inspect the company's employees working conditions and ensure they are paid a wage representative of the area. Turning up unannounced can sometimes reveal the true conditions. Go and see for yourself, do not take the word of third parties


Be prepared to learn the language and culture of the country in which your product is being manufactured. Personal relationships and respect for cultural differences are very important to ensuring a fruitful business relationship.

Disaster recovery

Do you have a contingency if it all goes wrong? We would suggest you need a plan in case the offshore supply chain is interrupted for any period of time.


How much of the labour cost gain will be taken up by import duties and tariffs? Certain countries charge duties on the importation of electronic components which can be expensive depending on the type of commodity. Do not under estimate the customs paperwork required to be completed for the chosen country of origin. Investigate thoroughly.

Intellectual Property

Are you comfortable your IP will be protected? If you are unsure, have two or more vendors involved in the supply chain to ensure no one company holds all of the information. Alternatively, have a 'vanilla' product shipped into you native country and final assemble it there.


Be prepared to support each and every new product introduction with your own 'man of the ground'. This is a pre-requisite to ensure there are no communication or translation issues or mis-understandings. Do not forget to account for flights/subsistence costs when formulating a 'budget'.

Shipping Costs

Work out in advance the cost of movement of the products. For example heavier parts may need to travel by sea thus increasing lead-times where lighter parts can travel by air.


Not every product is suitable for offshore manufacturing. Factors which need to be considered include complexity, volume, and type of labour content, ratio of material to labour, duty, language and accreditations.

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Guide Written by Paul Wilson

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