Moving manufacturing
out of China?

Where to, when and how?

Risks

Staying in China –

  • The US-China trade dispute seems likely to continue tariffs the major weapon
  • The COVID-19 pandemic has not been eradicated and a second wave is possible
  • Anti-globalization and anti-China sentiment is gaining momentum

Challenges

Moving out of China – 

  • Where to, when and how to move:
    • Where is the most suitable geography?
    • How long should I maintain my existing supply chain?
    • and how do I select new vendors?
  • What risks should I be aware of from phasing out existing suppliers, especially as I ramp up with new suppliers?
  • Is there any better solution to reduce workforce fixed cost and maintaining flexibility?

Where to ?

Mexico, Vietnam, USA or ?

Re-locating your supply chain is a big decision, and there are many factors to take into consideration.

Cost

  • Labor cost
  • Materials cost
  • Overheads
  • NRE (Engineering, tooling, NPI development)
  • Logistics cost
  • Taxes and tariffs

Operations

  • Capacity flexibilities
  • Facility and infrastructure
  • Seasonal demand management
  • Environment, health and safety protection

Supply Chain

  • Lead time for customized materials
  • Local fast support for repair and replacement

Quality

  • Overall quality control capabilities
  • Quality system compliance

Technical Capabilities

  • Engineers' experience and expertise
  • Labs capabilities and availability
  • Manufacturing capabilities

Workforce

  • Qualified operators' availability​
  • Qualified engineers' availability​
  • Customized materials supply chain maturity​

Industry Expertise

  • Certifications (e.g. ISO 13485)
  • Sub supply chain integration level
  • Experience on specific products

...

When ?

Prepare yourself, it may take longer than expected

Here is a 26-week transfer process for your reference.

Lead time estimation: 4 weeks.

Action items: 

  • Determine Project Scope
  • Execute Technical Assessment
  • Perform Financial and Schedule Assessment

Lead time estimation: 5 weeks.

Action items: 

  • Develop a Detailed Project Schedule
  • Identify Regulatory Needs and Support
  • Implement a Risk Management Strategy

Lead time estimation: 4 weeks.

Action items:

  • Implement Design and Process Improvements
  • Run Prototype and Evaluate Changes
  • Perform and Document Testing to Support

Lead time estimation: 5 weeks.

Action items:

  • Build or Transfer Tooling
  • Perform Installation Qualification (IQ)
  • Finalize Manufacturing Procedures
  • Initiate Test Method and Validation

Lead time estimation: 4 weeks.

Action items:

  • Execute Operational Qualifications (OQ)
  • Finalize Testing Methods and Validations
  • Perform Line Audit for Manufacturing Kick Off

Lead time estimation: 4 weeks. 

Action items:

  • Build and Manage Safety and Close Out Stock
  • Confirm Capacity Ramp-Up Plan and Metrics
  • Monitor Line Metrics

How ?

Can this transition be safe and efficient?

There are several key rules to think about.

  • Supply chain resilience is more important than a small cost benefit.
  • Total cost of ownership must be accurately considered.
  • Plan as early as possible.
  • Build up a dedicated execution team, with local knowledge to implement the plan on the ground.
  • Build solid processes, procedures, tools and systems before implementation.
  • Selecting suitable new manufacturing partner is vital for the whole business.
  • Good documentation will keep you safe from deviation.
  • Maintain good relations with existing suppliers.
  • Negotiate and reach practical agreements with new and existing suppliers.
  • Leverage experts’ assistance.

How we can add value ?

Act as your extended resources to fill the gap.

We are specialized in finding right Tier 2, Tier 3 suppliers from components to contract manufacturers.

Risk
analysis

Supplier assessment: business & operations, finance, supply chain, manufacturing, R&D, quality, and CSR.
Cost review: materials, labor, overheads, profit, NRE, logistics, tariff, after sales, efficiency / lead time involved, risk, etc.
Supplier/partner selection: full process from candidates screening, RFP review, onsite evaluation,SWOT analysis, MSA (Manufacturing Service Agreement) negotiation, to project kickoff and ongoing liaison.

Production
transfer execution

  1. Project investigation & preparation
  2. Transfer implementation (with new and existing suppliers)
  3. Documentation
  4. New supplier ramp-up

Contact us

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