Using a Mexican subcontract manufacturer to take over some production for a foreign company is a business strategy that has been widely used to reduce costs without sacrificing quality. Some of the world’s best-known companies have, over the years, trusted this option. Despite this fact, there are certain things that companies should pay close attention to while in the process of choosing their manufacturing partner.
Using a Mexican subcontract manufacturer has to do with cost-effectiveness and the expansion of businesses or business operations on a global scale, but to better understand it, you also need to be aware of potential bumps in the road.
The following is a list of the top 10 things to be aware of:
#1: Infrastructure to ensure data and IP security
A company or business’s data or IP may be well protected, data loss or leakage can result in severe economic loss. Businesses that choose to manufacture through a company in Mexico must make sure that the firm has the infrastructure in place to safeguard data and IP.
#2: Transparent costs
There are several cases in which companies using a subcontract manufacturer in Mexico are surprised by the sudden and extra commissions that were never part of the initial agreement. This is the main reason why most companies currently offer fixed rates.
#3: Good communication
One of the biggest concerns related to choosing a Mexican subcontract manufacturer is the potential existence of a communication barrier, as it involves the hiring of a company in which English may not be the central language. It is of primordial importance to make sure that the chosen company’s level of language competence ensures excellent two-way communication.
#4: Effective employee management
Customers using a subcontract manufacturer in Mexico should be interested in how the employees of the chosen manufacturing partner are being managed, as well as be familiar with its hiring process. These two considerations are essential to ensuring the competence of the employees that they hire to work on manufacturing projects. Working with a service provider thousands of miles away makes it difficult to monitor labor productivity due. The Mexican subcontract manufacturer must be able to do this effectively.
#5: Proper work distribution
Quality manufacturing is not about multitasking employees; it’s about hiring multiple employees and making sure that each individual is efficient in his or her job responsibilities. Because progress may be hampered by poor distribution of work, companies that engage with subcontract manufacturers in Mexico must make certain that their chosen service provider has skill and experience in this area.
#6: Cultural Barriers
As with communication barriers, a lack of understanding and acceptance of different cultures can lead to misunderstandings that negatively affect production. This potential obstacle can also prevent the client company and its Mexican from establishing a harmonious and lasting relationship.
#7: Technological skill and expertise
Many customers who hire companies that perform subcontract work in Mexico seek to develop a relationship with a partner organization that is able to provide extensive and dynamic technological services and capabilities. However, technological advances in countries are not always the same. This is an essential issue to consider because companies in advanced countries such as the US often subcontract their work to Mexican service providers. Many of these US manufacturers maintain high standards when it comes to technology; therefore, outsourcing subcontract work to a company that cannot meet technical requirements and expectations will only slow down its business operations.
#8: Quality issues
A Mexican subcontract manufacturer attracts companies due to lower labor costs, which allow them to hire two or three employees for the price of one. However, the quality of work is not always guaranteed when it comes to this production. Companies that hire a Mexican supplier must be aware of any cases of employee inexperience, poor team management, inability to understand requirements, among others.
#9: Rate of turnover
A Mexican subcontract manufacturer with high rates of turnover can have an adverse effect on the business as this can mean a loss of skilled workers and the need for retraining or knowledge transfer. This can take time to implement and can slow down a project’s progress.
#10: Legal problems
Customers doing business with Mexican subcontract manufactures are required to comply with different sets of rules or laws in the country. As such, it is important that US companies clarify all terms and conditions of any agreed to a contractual arrangement.
Mexican subcontract manufacturing today
Despite the need to develop an awareness of what may be a new market for them, hundreds of companies and businesses continue to have their goods produced by Mexican subcontract manufacturers. Knowledge of the market will enable US companies to reduce risks by making good strategic choices when approaching a potential partner. Subcontracting work to Mexican manufacturers offers many business benefits. In order to make sure that everything works smoothly with a subcontract manufacturing partner it is necessary to analyze all options.
Photo by Khwanchai Phanthong