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Friday, 20 May 2016 01:24

Reasons to use a broker when manufacturing in Mexico

    When thinking of manufacturing in Mexico, some people are tempted to fly solo.

    However, the D.I.Y. route has it is serious caveats, especially if you have no experience outsourcing in Mexico.

    Before we go on, let me confront the elephant in the room. That is, the notion that I am promoting the use of contract manufacturing brokers because we at Outsourzia are, duh, contract manufacturing brokers.  

     

    If you are considering outsourcing to Mexico to decrease production costs, why pay a broker´s fee?   


    These are the reasons:

    1. Local expertise. Labor laws are different in Mexico than in the U.S., taxes work in a different way, even time seems to run at a different pace. Getting a broker to help navigate the production process is all the more important when manufacturing in a foreign country. Before setting out to produce, a broker will ensure the factory can accommodate your orders in due time and proper form.

    1. To actually save money on production.  Unexpected fees and expenses eat away at profits. Outsourcers must be very informed about taxes, customs fees, transportation costs and manufacturing overhead. Lack of planning can trigger unnecessary expenditures in last minute shipping of raw materials -which may be unavailable locally. Also costly are corrective production runs and unplanned storage.

     

    1. Accountability. There is a significant difference between a contract manufacturing broker and what we call a “contact maker.” The “contact maker´s” participation will end when an entrepreneur and manufacturer close the deal. A contract manufacturing broker, on the other hand, will take full responsibility of the project until completion. While   “contract makers” help establish a company, they do not assist with the actual production process, and cannot be held accountable for any problems.

    4. Reliability. Cultural differences and language barriers often get in the way of manufacturing milestones. By using a broker you stand a much better chance of complying with the dates for production start, rough production completion, finishing, and testing.  A knowledgeable agent will be acquainted with the reputation of small and large factories in the area, and will steer clear of the ones that have a history of overcharging the  “unsuspecting gringo” or underperforming.

    5. Fair treatment. A savvy broker will assess the quotes of third-party providers, making sure you always get a fair deal. There is no equivalent to a Better Business Bureau website in Mexico, where you can see a business´s rating and get a general feel of the company you are dealing with. You´ll have to rely on someone who knows the players firsthand –and that someone would better be on your team.

    So, how do you choose an outsourcing broker?

    Going online is just the first step. If you know someone who is already doing business in the Cali-Baja region, get referrals. Schedule a meeting, preferably in person. Does the person seem to understand what you are looking for?

    These are some questions you may want to ask them:

    - How long have you been working in the area?

    - How long have you been working in manufacturing?

    - Where is your agency based?

    - Can I visit the factory or workshop?

    - How do you choose the providers you work with?

    Beware of too-good-to-be-true deals and impersonal approaches.  

    Moreover, do you see yourself working with this person? Using a broker is especially important when doing business across the border. You want an expert that will protect you at all times and ensure the operation runs smoothly and efficiently.  

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