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Friday, 16 October 2015 17:17

Do's and Don'ts of Outsourcing Your Manufacturing in Mexico

    When thinking about outsourcing your manufacturing to México, you may wonder why some people swear by it, while others have had disastrous experiences…

    As with any kind of plan, the difference between success and a nightmare is always in the implementation. How to implement the manufacturing plan and who your partners are, is critical if you are seeking a profitable and smooth operation (and who isn´t?). 

    So, here is a quick overview of recommendations:

    Don't fly solo.

    The reasons to outsource your manufacturing in Mexico may be self-evident, but the way to do it might not be so straightforward. If this is your first time (and even a second or third) or if you are breaking into a new industry, I recommend seeking support. Countries such as Mexico do an honest effort to make outsourcing as uncomplicated for foreigners as possible. But there are important legal, commercial and cultural differences between the two countries, which can result in costly mistakes for the uninitiated. Those “unknowns” can eat away at your margins and affect delivery dates. They include:

     

    • Foreign taxes
    • Custom duties
    • Export / import regulations
    • Transportation
    • Warranties and quality control issues
    • Permits

    A contract manufacturing outsourcing company will be proficient in all of these areas.

    Do. Go local.

    Contract manufacture brokers in the San Diego-Tijuana area boast an enviable strategic advantage over the competition. Their proximity to the Border warrants frequent inspections to the factories, and makes it easy for them to tend to problems. It also allows brokers to offer a larger range of manufacture options, from large maquilas to smaller workshops, which may make a better fit for your operation. A local manufacture broker can personally meet clients in the San Diego area, Los Angeles, Orange County and beyond.

    Don't suppose.

    So, a manufacturer sent you a quote, and everything looks fantastic. Are you ready to commit? Actually, this is where you should hit the PAUSE button.  The  ”quote and go” approach has several problems, the main one being assumptions. Is every important element   included in the quote?  Are there any markups you might not be aware of? Is it missing any steps?  A reputable broker, especially one who offers a comprehensive outsourcing solution in Mexico, is your best bet in order to avoid pitfalls. He will provide you with an itemized quote, which clearly states material, labor, freight, customs and other fees. Their commissions will be   stated as a distinct item. He will be able to explain the whole process to you, from the design stages to the delivery of the product, and let you know what to expect on every step.

    Do know your communication channels.

    If you are dealing directly with the factory, it´s vital to be aware of whom your main contact will be. Will the factory be providing you with updates and weekly reports?  Is there a dedicated individual or department within who will be responsible of communications? When and how will they let you know of any possible delays or problems? We´ve all heard stories about entrepreneurs who have been forced to jump on their car in a panic and drive down to México to find a MIA manufacturing rep, or tend to surprising news about the products that were supposed to be shipped yesterday….

    Don't get married.

    Yes, you know. All your friends told you so… Well, love is blind, but outsourcing your manufacturing is not. The best outsourcing contract agents in the Cali-Baja region offer an array of well trusted manufacturers, to cover different needs and requirements. Using a broker will allow you to get familiar with the process, without incurring into the costly commitment of creating your own maquiladora. You will be able to find a good match. And, when you are ready to start your own private operation, he should have the ability to help you transfer or provide you trained workers. Now, if only marriage offered such options…

    All of these tips will help you fall into the category of those successful entrepreneurs who outsource in México. We at Outsourzia will make sure of it.


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    Ezequiel Nacach

    Ezequiel Nacach, founder of Outsourzia, is an entrepreneur with 35+ years of business experience in the B2B and B2C worlds. Having owned and managed multiple retail businesses in Mexico, and manufacturing companies in both Mexico and the US, he has a vast knowledge of what it takes create and develop new products. Originally from Mexico City and now living in San Diego, California, Ezequiel helps American inventors and business owners to bring their ideas to life by manufacturing their products in Mexico. 

    Learn about Ezequiel on LinkedIn

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