If you’ve spent any time in the Pearl River Delta recently, you’ve probably spent much of it discussing the rising cost of manufacturing here. Margins are being squeezed by ever rising material, labor and logistical costs. People running facilities here are talking about moving inland, moving out of China, or closing up shop. But there are alternatives to going broke or opting out. Here are a few I’ve explored, both in my own facility, and in conversation with other factory owners and managers.
- Change product mix Concentrate more on higher margin production, those with more design or technology value.
- Outsource labor-intensive process steps Within existing product mix, try to outsource the more labor-intensive process steps and concentrate in-house on the higher value-added processes.
- Add value with flexibility Change production management to competitively manufacture low volume/high mix/quick turnaround, allowing for higher margins.
- Go lean When costs rise, reducing waste throughout the organization becomes more important. If “lean” was just a buzzword yesterday, it will be a competitive advantage tomorrow
