Product Lifecycle Management (PLM) is Critical To Your Bottom Line. Is Your Company Leveraging It?
Although pandemic-induced supply chain disruption continues to be a significant issue for product developers, they must continue to contend with a host of other challenges that are simply part and parcel of doing business. Among these, product lifecycle management (PLM) remains high on their list of concerns.
At Pivot International, we’re an industry leader for helping companies surmount supply chain disruption. We bring nearly 50 years of product development and manufacturing expertise that spans twelve industries and three continents. With multiple ISO certifications and advanced PLM systems to enhance our already strict quality control systems, we help companies worldwide bring successful products to market that are designed and documented to FDA, UL, and CE standards.
Unpacking PLM
Product lifecycle management (PLM) is an end-to-end process that tracks and regulates complex product data constellations across the product lifecycle. It begins at product-concept and extends through product design, engineering, prototyping, manufacturing, distribution, use, and disposal. Its primary goal is to integrate — and therefore optimize — all aspects and phases of successful product development.
PLM centralizes all product-related data and allows the product development process to be managed holistically with high levels of effective coordination between design and engineering teams, supply partners, company leaders, and other key stakeholders.
PLM Benefits
The business case for leveraging effective PLM systems is undisputed since these systems are critical for driving cost-savings and achieving concrete business objectives in the following ways:
- It lowers operational costs and management costs by streamlining product development and manufacturing processes.
- It makes product development dramatically more efficient by expediting the end-to-end process.
- It accelerates time-to-market, leading to a significant competitive advantage.
- It supports well-defined product processes and improves effective collaboration concerning contract data, requisitions, purchase orders, and more.
- It maximizes visibility and augments and enhances quality control through rigorous gatekeeping protocols.
- It reduces supply chain and data security risk via greater transparency into the complex chain of relationships that constitute the product lifecycle.
Leveraging PLM Through Strong Partnerships
Even in the best of times, implementing an effective PLM system can be a challenging initiative to helm, and during disruption, the challenge becomes that much steeper. Engaging a product development and manufacturing partner that can deliver effective supply chain solutions and take the lead on effective PLM-implementation can help companies defy disruption, get their projects back on track, and bring innovative products successfully to market.
At Pivot, we lead effective PLM of both product design and manufacturing services using Oracle’s Agile Product Lifecycle Management system. This system supports change-control by importing the bill-of-materials of a current product while recording engineering change orders, engineering change requests, temporary deviations, manufacturing change orders (MCOs), and more.
If you’re seeking an industry leader for defying disruption, increasing resiliency, seizing emerging market opportunities, and scaling for a rapidly unfolding future, Pivot is the partner you’ve been looking for. Contact us today for a free consultation and see the difference a proven partnership can make for your business.
A Five-Fold Approach for Helping Product Developers and Manufacturers Innovate Forward
As the manufacturing sector continues to be hard hit with the impacts of COVID-19, companies are increasingly seeking partners with robust supply chain solutions and proven experience for navigating disruption, increasing resilience, and preparing for a new future.
At Pivot International, we’re at the forefront of delivering solutions to the current sourcing crisis. For nearly 50 years, we’ve been helping our partners overcome the toughest procurement, product development, and manufacturing challenges. As an Essential and Critical Supplier with 200,000 square feet of domestic and offshore manufacturing capability, we’ve emerged in this unprecedented time of challenge as an industry leader for equipping companies to successfully navigate and surmount disruption.
Product developers and manufacturers committed to providing their partners with 360-degree solutions to the sourcing crisis while also helping them “innovate forward” need to take a five-fold approach.
1. Identify opportunities and strategically pivot to seize them.
Successful adaptation to disruption begins by moving beyond obvious challenges and identifying hidden opportunities. While damage control is always the first order of business, companies that focus too narrowly on mere survival can easily overlook opportunities for innovation. Engaging a partner with extensive experience in reconfiguring supply chains and repurposing production to seize emerging opportunities can make the difference between simply staying afloat vs. positioning your business to emerge from the crisis even stronger than before.
2. Leverage transparent, digitized supply chain solutions.
If ever there was any question about the value of supply chain transparency for mitigating and surmounting disruption, the challenges of COVID-19 have settled the matter. Product developers and manufacturers that have not made transparency a priority and therefore lack insight into all tiers of their supply chain confront their customers with unacceptable levels of risk.
Even in the best of times, supply chain digitization, which includes AI, SMT, blockchain platforms, and more, is necessary for building stability and scalability. In the worst of times, digital adoption becomes exponentially more important for managing the escalating complexity that comes with any significant crisis. Moreover, digitization delivers the agility for making rapid pivots to effectively respond to the erratic spikes and dips in demand that often follow in the wake of disruption.
3. Closely monitor changing consumer behavior and market trends.
The post-COVID world that is emerging is bringing with it changes in consumer behavior and market trends. Translating these changes into competitive products requires both real-time intel as well as broader industry and market insights. Product developers, for example, that conduct social listening — automated analysis of their target demographic’s social media activity — can keep their finger on the pulse of changing consumer needs, preferences, pain-points, and market trends. Social listening also helps companies zero in on broader market trends, identify why they may be losing business to a competitor, and ascertain how to regain customers or earn greater loyalty.
4. Deploy design thinking to optimize both UX and manufacturability.
The most competitive, profitable products are designed with both UX (user experience) and supply chain considerations in mind. Design thinking — which applies principles of sound design not only to aesthetic and functional aspects of a product but also to its manufacturability and scalability — is becoming an increasingly valuable and sought-after competency. Recent research is demonstrating that a company’s investment in top design talent and advanced design processes can be directly traced to increased revenue.
5. Lead with a commitment to compliance and quality.
No matter how well a product is designed and optimized for manufacturability, if it doesn’t meet compliance standards and isn’t subject to strict quality controls, sunk costs are guaranteed. Implementing compliance and quality strategies and services that span the value chain is essential for ensuring that product developers exceed customer expectations throughout the product lifecycle. Look for a partner that adheres to IPC standards and CE, UL, and FCC requirements, as well as one that provides RoHS-compliant assembly as a standard offering.
The challenges of COVID-19 continue to present tough challenges, but at Pivot, we’re paving the way forward for our partners with innovative solutions. We have the experience and resources to close your inventory gaps and meet your immediate products needs, and while helping you identify opportunities for innovation that will fortify your business for the future. We bring IEC (60601-1) and ISO certifications, FDA registration, UL listing, and CSA approval. Contact us today for a free consultation. We’re here to help.
4 Ways Top Manufacturing Companies are Building Digital Muscle
From ongoing constraints due to trade uncertainties to difficulty attracting and retaining talent, the U.S. manufacturing industry has seen a year of heightened challenge. And although this past year saw the expansion in the U.S. economy become the longest in history, the manufacturing sector has shown signs of contraction in current months. According to Deloitte, projections for GDP growth levels reflect recent trends, adjusting from 3.7% down to 2.7% for 2019 and 2% down to 1.3% for 2020.
However, amidst continued volatility in prices and policy decisions and diminished productivity, the industry is working to regain its footing. And digital “muscle building” is one of the emerging trends of this progression. Building digital muscle refers to the adoption and deployment of innovative digital technologies that build both agility and scalability.
At Pivot International, as one of the world’s top manufacturing companies with company-owned facilities across multiple continents, we’ve made it our mission to build this digital muscle by investing in the four following specializations. In doing so, we’re helping companies adapt to the new business climate, develop winning products, and achieve success is an ever-changing market.
The Digitization of the Supply Chain
Digitization can be understood as the use of digital technologies, like big data, IoT, and blockchain platforms. More broadly, digitization is the process of optimizing logistics by leveraging a combination of leading-edge mechanical/physical technologies and analytical/informational technologies. Digitization manages and “opportunizes” complexity, therefore improving the agility and resilience of supply chain logistics. This strategy enhances efficiency, accuracy, and real-time responsiveness, promoting higher customer satisfaction and increasing revenue and market valuation.
Surface Mount Technology
Surface Mount Technology (SMT) is the newest, most effective, and efficient electronic manufacturing solution – utilized in virtually all commercial, industrial, and consumer products with electronic features, ranging from phones and computers to coffee makers and medical products. SMT has broad applications and ensures highly accurate execution of high-volume production. As a leading design, engineering, and manufacturing firm, Pivot has expanded its production capacity with a strategic investment in SMT, providing our customers with the most advanced and cost-savings technology while continuing a rapid ascent to industry dominance.
Artificial Intelligence in Software Development
Software development is undergoing a paradigm shift, and artificial intelligence is the catalyst for it. The key takeaways from this ongoing evolution include the need for developers to become more proficient in machine learning algorithms and Software 2.0 and to continually test models against real data for efficacy. Additionally, companies shifting towards AI-powered software development practices are encountering new security challenges. Third-party algorithms can contain insecure dependencies, but using the code’s latest version will safeguard security.
Additive Manufacturing
Additive manufacturing (AM), also known as 3D printing, is a technology that continues to rewrite the rules of the manufacturing game. Design- and engineering-intensive businesses are successfully scaling with the increased customization, accelerated time-to-market market, and improved design, functionality, and performance that AM affords. But despite the sweeping changes AM has already affected in the manufacturing industry, there remain challenges to its widespread adoption. They include fragmented design knowledge, cost-prohibitive production, and limited production scale.
But these challenges are being overcome by innovative AM design services, specialized consulting firms, and government-backed applied R&D. Analysts are predicting that the next wave of AM will dramatically cut current production costs as patents expire, post-processing needs are reduced, and manufacturers utilize economies of scale. What’s more, larger AM manufacturers believe that AM can achieve with both plastics and metals what can currently be delivered only through traditional production processes. Even more encouraging, new polymers and alloys promise AM performance beyond that of contemporary plastic- or metal-based materials.
Many companies have shifted their efforts toward digital products that build agility and scalability, and digital muscle-building is a major leverage point for increasing flexibility in global supply chains. Applying innovations, like SMT, AI, and additive manufacturing to the value chain can increase visibility and transparency. This allows manufacturers to make rapid changes to their operations to respond to market-based opportunities or threats.
As manufacturers continue to seek out bright spots in the global landscape, shifts in sourcing (and thus production) are already playing out on the global stage. In fact, manufacturers have shifted both sourcing and production to different geographies, creating tariff-friendly combinations in just a matter of months.
As a world leader in single-source product design, development, and manufacturing, Pivot offers the seamless convenience of working with a U.S. company and the financial advantages of utilizing its in-house, offshore tooling procurement and manufacturing capabilities. Contact us today to learn more about how we can help take your company into a successful future.
How Top Manufacturing Companies Are Delivering the Factories of the Future, Today
Factories that employ “lights-out manufacturing” are fully automated and can run without any human presence on site. Believe it or not, some factories have been operating this way for more than 15 years.
“Industry 4.0,” or what has been called the fourth industrial revolution, is making this kind of manufacturing more prevalent than ever. The following article explores some of the advances of Industry 4.0, and how the top manufacturing companies are delivering the factories of the future, today.
Robotics & 3D Printing
Factories that have access to 3D printing greatly accelerate the product development process. Typically used for prototyping, 3D printing saves both time and money by producing product iterations faster.
Like 3D printing, robotics can automate the physical trial-and-error method. For instance, a manufacturer that works with chemicals can transform their process with liquid-handling robots that can automatically pipette.
AR and VR
Augmented and virtual reality are allowing manufacturers to speed up their design processes, reduce their development costs, and iteratively test multiple variations of a product.
At Pivot International, we’re using VR and AR to streamline design processes. With virtual visualizations, our teams can make strategic product improvements, giving our clients immense cost-savings.
Resource Planning & Sourcing
After a product design is determined, the next task is figuring out all the production details, i.e. finding a supplier.
While sourcing is a complicated and lengthy process, technology is making it a lot easier. For instance, with decentralized manufacturing, multiple facilities cover one area, so the products are manufactured and distributed nearby.
While enterprise resource planning (ERP) software can track resource allocation, it becomes difficult when one has several ERP systems. Blockchain can be used to unify this data. For instance, British Airways first used blockchain technology in 2017 to create a unified database of flight information.
Quality Assurance
Technology is also streamlining quality assurance in facilities. Computer vision can detect issues and defects that humans may potentially miss. The start-up, Instrumental, is already using AI to uncover production errors. With electronics manufacturing, some mistakes are not even physically visible to the human eye. In such instances, technologically-enabled QA is beneficial.
In addition to tracking resources for production, blockchain can also assist in QA. As of August 2017, Walmart, Kroger, Nestle, and other corporations partnered with IBM to use blockchain for supply chain tracking in hopes of improving food safety. By using blockchain, Walmart was able to reduce the amount of time needed to track mango shipments from 7 days two 2.2 seconds.
Pivot International, an agile product design, development, and manufacturing firm, has taken an integrative strategy to supply chain digitization. This strategy has resulted in compounded annual revenue growth of more than 100% over the last 5 years and made Pivot an industry leader.
For businesses seeking a single-source partner, Pivot ranks first in customer satisfaction, and for more than 46 years has been the driving force behind some of the most innovative products on the market. If you’d like to learn more about how Pivot can help take your product or supply chain to the next level, reach out today for a free, no-obligation consultation.
Electronics Manufacturing Facility-Maintenance: Leading Developments and Breaking Trends
The electronics manufacturing industry has undergone many transformations over the last several years. But what has remained a constant is the importance of facility maintenance. Facility conditions such as air quality, temperature, humidity levels and so forth play a critical role in production processes and the success of end products.
The following article provides a brief overview of electronic manufacturing facility-maintenance developments and trends.
1. Air Quality Management
Electronic components must be manufactured in pristine conditions. Dust is one of the main concerns for facility operators because it can contribute to electrostatic charges. This particular issue is worsened in low humidity because airborne dust particles are drawn to static electricity. One of the most effective solutions is implementing a humidity control system that can manage the facility’s moisture content.
2. Evaporative Cooling
Electronic facilities generate a substantial amount of heat, which in turn, requires high cooling. Not only do evaporative cooling systems provide humidity control, but they also help facilities counterbalance cooling expenses.
Evaporative cooling works by injecting liquid water directly into the air. This means there is no need to add thermal energy to the water. The water vaporizes by taking in the heat from the air.
3. Long-term Sustainability
Sustainability is a growing trend in electronics manufacturing. Maintaining a sustainable operation, however, is time-consuming and costly. Even replacing air filters comes with the risk of releasing contaminants into the facility. That being said, being proactive can make a vast difference. It has been reported that “regular maintenance of HVAC systems can reduce energy costs by 5 to 40 percent.”
Water conservation in electronics manufacturing is also gaining more awareness. HVAC systems, heating boilers, cooling towers, and central steam systems all require water. The latest equipment requires less water, so modernizing one’s facility is an environmentally friendly move.
4. Humidification/Dehumidification
While high humidity should be avoided, low humidity can also be detrimental in an electronics manufacturing facility. When the humidity levels are too low, static electricity increases, which can significantly damage products. This is why it’s essential to track the moisture levels year-round, as they fluctuate with the seasons.
5. Direct Room Humidification Systems
Direct room humidification systems differ from HVAC equipment by using a high-pressure pump system that emits ultrafine mist directly into the needed areas. This is especially effective during an electronic product’s final assembly. Because water is dispersed only when it is required, direct room humidification systems conserve a large amount of energy and water.
Direct room humidification systems are also easy to operate. Air handlers and ductwork are not required, and the system is capable of operating autonomously, which saves electronic manufacturer employees’ time.
A clean, uncontaminated, and sustainable facility is necessary to achieve the highest quality of electronics manufacturing.
At Pivot International, we deliver electronic manufacturing services through company-owned facilities maintained with the latest advances in climate control. We bring nearly 50 years of experience in design, development, manufacturing, and supply chain management, as well as the latest in SMT. Pivot has over 175,000 square feet of manufacturing capacity, in five locations, with class 7 and 8 cleanrooms. Our electronic engineering and manufacturing technicians follow IPC standards, ensuring the production of high quality, reliable components. We also provide standard RoHS-compliant assembly processes with each assembly. To learn more about our world-class electronics manufacturing, contact us today.
Do’s and Don’ts When Looking For A Global Manufacturer For Your Product
Global manufacturing is essential for U.S. companies looking to expand into international markets, reduce labor costs, and counteract resource shortages. Finding the right global manufacturer, however, takes time and effort.
With more than 46 years of experience in global manufacturing, Pivot International has successfully partnered with thousands of businesses. Not uncommonly, we find that a large number of these businesses have had negative experiences with other partners. These experiences can be avoided by adhering to the following “do’s” and “don’ts”.
Do confirm global sourcing makes sense for your business.
Your company should be able to justify this move from the get-go. Make sure you’re confident that manufacturing overseas is the right decision for you at this time. You can read about the pros and cons of domestic or international production here.
Do ensure you can maintain a physical presence overseas.
Technologically enabled communication is currently driving global business. When it comes to manufacturing, however, it’s advised—and even expected—your company has “boots on the ground.” This is especially true in Asia. Manufacturers in the Philippines expect American companies to set up satellite offices or send over representatives.
Having a physical presence overseas also makes it much easier to problem solve and keep up-to-date on your product and its progress.
Do consider the manufacturer’s experience.
Has the manufacturer worked with companies similar to yours? What about known brands? A manufacturer’s expertise is indicative of its capabilities and overall reliability. A sound demonstration of knowledge and experience is critical.
Don’t underestimate the importance of quality assurance and quality control.
You want your manufacturer to deliver quality every time, on time, not just with small orders or samples. Ask your potential global manufacturer how they manage quality. They should have step-by-step practices in place that occur at every stage of the production cycle. Remember, quality control should start before there is a problem.
Don’t forget to ask about minimum order requirements and payment terms.
Another important consideration is the manufacturer’s MOQ, or, minimum order quantity. MOQ’s vary significantly among global manufacturers. While a Chinese factory usually requires 1000 pcs, Vietnamese manufacturers are known to accept an MOQ of 250-300 pcs. (You can read more about your manufacturing options outside of China here). Before you agree to partner with a company, you must ensure the minimum orders work with your budget. If this is your first time working with the manufacturer, they may require pre-production payment in full. Verify if this is the case.
Don’t jeopardize your timeline.
Be upfront if you need manufacturing to be completed by a specific date. That said, if it’s your first time working with a manufacturer, it’s wise to build in a buffer for potential delays. If possible, try to stay ahead of schedule.
Pivot is a world leader in product development and manufacturing. We offer the seamless convenience of working with a U.S. company and the financial advantages of utilizing our own in-house, offshore, tooling, procurement, and manufacturing capabilities. Contact us today if you’d like to hear more about how working with Pivot can drive your product’s success.
How to Identify the Right Manufacturer for Your Product
You’re proud of your idea for a product, and you’re confident that your creation will add significant value to your customers’ lives. You also understand that successfully bringing your product to market will depend, in large part, on the actual production process and that choosing the right manufacturer is essential.
So, how do you choose the right manufacturer? As a company with manufacturing experience in assembly, electronics, original design, product prototype and more, we at Pivot recommend making your choice with the following considerations in mind:
1. Experience
When evaluating a manufacturers’ qualifications and experience, find out what businesses they’ve worked with. Working with known brands is not only indicative of the manufacturer’s reliability but also its global distinction. Once you’ve identified these brands, reach out to them to learn more about their experience working with the manufacturer. When investigating a manufacturer, pay attention to how their representatives answer your questions. For instance, if you want to make an electronic product, can the representative speak to electronic sourcing? Ultimately, you are looking for a sound demonstration of knowledge and experience.
2. Size
Typically, large manufacturers possess a lot of knowledge and experience. Small manufacturers, on the other hand, often offer the advantage of greater flexibility. Bigger is not necessarily better, and that’s where research comes into play. Ultimately, the choice depends on your company and production needs.
3. Turnaround Time
You must be on the same page with your manufacturer regarding your desired production timeline. You should directly inquire about the turnaround time and determine if their schedule fits with your own. It’s also important to be aware of how turnaround times correlate with production pricing.
4. Sourcing
Occasionally, manufacturers will outsource their production for specific product components. You’ll want to determine if the partner you’re considering relies on this approach, and if so, to what degree. If the answer you receive is ‘yes,’ be sure to research the company your intended partner uses for outsourcing to verify they’re equally reputable.
5. Minimum Order Requirements
Another important consideration is the manufacturer’s MOQ, or, minimum order quantity. The MOQ can vary significantly among manufacturers and products. Before you agree to partner with a manufacturer, you must ensure that the minimum orders work with your budget.
6. Payment Terms
If this is your first time working with the manufacturer, they may require pre-production payment in full. Verify if this is the case, so you won’t be hit with any surprises.
7. Quality Assurance
You want to be assured that your manufacturer can deliver quality every time, not just with small orders or samples. This is ultimately more important than competitive prices or speedy turnaround times. Ask about what quality assurance practices the partner you’re considering has in place. These practices should be occurring at every stage of the production cycle, not just the end, to ensure all product components are devoid of defects.
Pivot International is a top contract manufacturer. With over a 40-year track record of helping companies design, develop, produce, and launch products, we have what it takes to deliver. We bring products to market both domestically and abroad. We are here to answer any questions to determine what makes the most sense for your company. Contact us today to learn more about how we can help you grow your business.
4 Huge Benefits of Manufacturing in the Philippines
In response to rising tariffs and escalating tensions between the United States and China, American companies are seeking alternative manufacturing locations—including the Philippines.
Why? The Philippines is home to some of the newest manufacturing technology, including mirrored SMT systems (like those in the Manila facilities Pivot owns). But there are many additional reasons to consider the Philippines as your next manufacturing destination.
The manufacturing sector is growing, as is the country’s economy
The Philippines has one of the fastest growing economies in Asia, and a quarter of the Philippine GDP derives from manufacturing. Significant manufacturing sectors in the Philippines include “semiconductors, electronic components, refined petroleum products, computer, peripheral equipment and accessories, and processed food.”
The Philippines’ Socioeconomic Planning Secretary Ernesto M. Pernia states that the Philippines’ manufacturing sector is “performing very well. Increases in the purchases of capital and durable goods contributed to the increase and further indicates that there is business and consumer confidence in the domestic economy.”
Production capabilities and manufacturing sectors
Metro Manila is known as the “financial, commercial, and industrial center of the Philippines,” accounting for almost a third of the country’s total GDP. Cebu City, the second-largest metropolis, is also home to a prosperous manufacturing sector that exports everything from furniture to housewares, gift items, and fashion accessories. Many global brands, including Polo, Ann Taylor, and Nike, are already manufacturing in the Philippines.
Plans to improve infrastructure
In 2017, the Philippines announced its plan to allocate $7.6 billion towards infrastructure renovations. President Rodrigo Duterte’s “Build, Build, Build” plan leaves the country “looking to spend $180 billion to renovate and build airports, railways, roads and ports over a six-year period.”
Educated workforce
The Philippines was ranked 14th out of 88 countries in the 2018 EF English Proficiency Index. According to the Board of Investors, the Philippines literacy rate is 94 percent. On top of that, 70 percent of the population is fluent in English.
The data above shows that the Philippines labor force possesses higher levels of education than other ASEAN countries. 21 percent of the labor force is educated to the tertiary level and nearly six out of ten of the country’s population has secondary education. Additionally, “in the human capital study done by the World Economic Forum, the Philippines scored well among ASEAN countries in ease of finding skilled employees.”
With a highly skilled and educated workforce, growing manufacturing sector, and infrastructure improvements, the Philippines is a reliable manufacturing alternative to China. Remember, regardless of the unique sourcing needs of your company, staying informed and flexible can help you successfully weather the current trade climate and maintain the health of your supply chain.
At Pivot International, we offer end-to-end supply chain solutions and viable alternatives to China-based manufacturing. As a single-source designing, engineering, and manufacturing company with facilities in Taiwan, Manila, the UK, and the United States, we bring nearly 50 years of experience in optimizing production for your business. If your company is currently confronting production liabilities, we can help. Contact us today.
3 Manufacturing Challenges Presented by China Tariffs and How to Surmount Them
So far, the Trump administration has imposed $250 billion in tariffs on imported Chinese products, posing a significant hit to the American economy.
According to a study commissioned by the Consumer Technology Association and the National Retail Federation, if both China and the U.S. impose an additional $100 billion in tariffs, job losses in the American agricultural sector will overpower “any net gains” in the American manufacturing sector. The following examines such central challenges brought on by the China tariffs and how to best overcome them.
Reconfiguring supply chains
As the tariffs have come in waves, so have shifts in supply chains. For instance, the first two series of China tariffs mainly fell on electronics and advanced machinery. Vietnam, which already was selling electronic components to some American companies, became the alternative supplier of choice for many businesses.
Moving production out of China can help make up for the tariffs, and many companies have already acted accordingly earlier this year. Apple’s supplier, Foxconn, is relocating iPhone X production to India. The shoe company Brooks Running is also discontinuing production in China and moving their manufacturing to Vietnam.
Diversifying supply chains is advantageous for global companies regardless of the trade climate. Companies that strategically maneuver within the global marketplace can minimize the effects of natural disasters, geopolitical turmoil, and economic upheaval to their supply chains.
Retraining and education
According to a study by The Trade Partnership, the steel and aluminum tariffs could result in a net loss of over 400,000 jobs in the United States. Out of those, it is predicted 19,000 will be lost in the manufacturing sector.
Agility has never been more imperative for workers in the manufacturing industry. Employers and employees must work together to retrain and educate themselves on how to conquer these new learning curves.
Sector-based partnerships can help bridge the gap between job training and the skills manufacturing employers need now. Moreover, employers that participate in these training programs can actively shape the future workforce.
Rethinking technology
Tariffs are increasing prices for energy products, industrial equipment, and many other technological components. In addition to that, technology is integral to the inner workings of American businesses, such as research and outreach. The China tariffs are thereby impacting the internal and external operations of U.S. companies—and on a massive scale.
The tariffs are also going to affect emerging technologies, such as artificial intelligence. Companies must decide which innovations they want to make a priority.
While the China tariffs are presenting American companies with newfound challenges, they also offer opportunities for change. How will your business advance in an era where unpredictability is becoming the new norm?
At Pivot International, we’re helping U.S. companies successfully navigate the current trade climate. As a single-source designing, engineering, and manufacturing company with facilities in Taiwan, Manila, the UK, and the United States we bring nearly 50 years of experience with Asian manufacturing and expertise to optimize production for your business. If your company is currently confronting production liabilities and is seeking a viable alternative to your current supplier, contact us today.
4 Reasons Product Developers Are Seeking Manufacturing Options Outside of China
In mid-May of 2019, President Donald Trump imposed 25 percent tariffs on $250bn worth of Chinese goods, and there are plans to impose an additional 25 percent tariff on $325bn more. While the trade climate certainly provides enough ground for seeking manufacturers outside of China, there are other reasons product developers are choosing to relocate. Here are just a few.
1. China is no longer the most inexpensive option
Multinational companies haven’t viewed China as the most economical choice for a few years now. The 2016 IHS Markit survey found that less than 50 percent of respondents agree that China is a low-cost sourcing destination. In 2012, that number was 20 percent higher.
According to the International Labor Organization (ILO), wages in China have more than doubled since the year 2006. In 2014, the average monthly salary in China was $685, while in Vietnam it was $212. The rising wages in China are already prompting global businesses to reconfigure their supply chains.
2. Domestic manufacturing offers ease of communication and common cultural understanding
Communication breakdowns are challenging and, at times, costly. Speaking the same language as one’s manufacturer can eliminate many communication issues, which translates into less wasted time and money. This alone is motivating some developers to manufacturer their products at home in the States.
3. Other countries offer lower Minimum Order Quantities
The Minimum Order Quantity (MOQ) requirement is the lowest number of units of a product a supplier is willing to sell. A Chinese factory usually requires 1000 pcs. Compare this to Vietnamese manufacturers, which will accept an MOQ of 250-300 pcs. Companies that need smaller production runs are opting for manufacturing options outside of China for this reason.
4. Quality control
Standards and regulations in China are not necessarily the same as American quality assurance and quality control. This divide can result in miscommunication and a lot of disorder.
Paul Midler, author of Poorly Made in China: An Insider’s Account of the Tactics Behind China’s Production Game, explains: “Chinese supplies want to save money by reducing specifications, and American companies are trying to fight for higher levels of quality at reasonable prices. The customer may always be right, but quality failures often are the result of a relationship imbalance and asymmetrical information. Manufacturing companies that produce a substandard product often know what the problem is with their product, but they don’t provide much of a hint to their customers. This means that importing companies have to guess at where corners may have been cut. It’s a dangerous situation for all of us to be in, actually.”
Manufacturing in China isn’t what it used to be. How will your company strategize?
At Pivot International, we’re helping U.S. companies successfully navigate the current trade climate. As a single-source designing, engineering, and manufacturing company with facilities in Taiwan, Manila, the UK, and the United States we bring nearly 50 years of experience with Asian manufacturing and expertise to optimize production for your business. If your company is currently confronting production liabilities and is seeking a viable alternative to your current supplier, contact us today.
